2024 ANNUAL REPORT
Who we are.
Searing heat. Crushing stress. Blistering corrosion. Maybe all the above. No matter the
challenge, we are honored to be our customers’ first call. That’s because at ATI, we’re
solving the world’s challenges through materials science.
ATI is a global producer of high-performance materials and solutions for the aerospace
and defense markets, and critical applications in electronics, medical and specialty
energy. Built on the strong foundation of our legacy companies, we are a market-driven
powerhouse: advanced, innovative, highly sophisticated and quality driven.
When you need materials to go further and faster, in the most extreme conditions,
ATI is proven to perform.
Primary Markets
Other Core Markets
DEFENSE
Our materials power
and protect the armed
services in the air, in the
sea and on the ground,
and help to push the
limits of space.
MEDICAL
Essential for modern
medical equipment,
devices and implants, our
specialty materials save
and improve thousands
of lives every day.
ELECTRONICS
We give capability to electronic
devices through our alloys’
unique electrical, magnetic,
cosmetic and corrosion-
resistance properties and our
chemicals for metal precursors.
AEROSPACE
You can’t fly without
ATI—our materials
are on virtually every
commercial aircraft
flying today — engines
and airframes.
SPECIALTY ENERGY
Our alloys fuel electrical
energy in nuclear reactors,
renewables and land-based
turbines. Our oil and gas
materials fight heat and
corrosion deep in the sea.
WWW.ATIMATERIALS.COM 1
ATI 2024 FINANCIAL OVERVIEW
In millions, except per share amounts
2022
2023
2024
Sales
$
3,836
$
4,174
$
4,362
Gross profit
$
714
$
803
$
898
Restructuring charges (credits)
$
(5)
$
8
$
4
Operating income
$
316
$
466
$
609
Results attributable to ATI:
Net income
$
324
$
411
$
368
Per common share
$
2.23
$
2.81
$
2.55
Adjusted results:
ATI EBITDA (a)
$
613
$
635
$
729
Net income as adjusted (a)
$
351
$
373
$
355
Adjusted results per common share (a)
$
2.41
$
2.56
$
2.46
BUSINESS SEGMENT RESULTS
High Performance Materials & Components (HPMC)
2022
2023
2024
Sales
$
1,641
$
2,120
$
2,278
Segment EBITDA
$
303
$
434
$
461
As percentage of segment sales
18.5%
20.5%
20.3%
2024 HPMC by quarter
Q1
Q2
Q3
Q4
Sales
$
530
$
562
$
552
$
634
Segment EBITDA
$
97
$
114
$
123
$
127
As percentage of segment sales
18.4%
20.2%
22.3%
20.0%
Advanced Alloys & Solutions (AA&S)
2022
2023
2024
Sales
$
2,195
$
2,054
$
2,084
Segment EBITDA
$
375
$
277
$
321
As percentage of segment sales
17.1%
13.5%
15.4%
2024 AA&S by quarter
Q1
Q2
Q3
Q4
Sales
$
513
$
533
$
499
$
539
Segment EBITDA
$
72
$
87
$
74
$
88
As percentage of segment sales
14.0%
16.4%
14.8%
16.3%
(a) Please see pages 7-8 for a reconciliation of adjusted results with the financial results prepared in accordance with accounting principles generally accepted in the U.S.
2 ATI 2024 ANNUAL REPORT
MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
To our shareholders, customers, and employees
In 2024, ATI continued its momentum as a premier
aerospace and defense leader. We delivered top-
line growth with double-digit increases to adjusted
EBITDA and Free Cash Flow, strong indications
that our transformational strategy is on track.
The ATI team responded nimbly to the dynamic
customer environment in aerospace, ending the year
with its highest revenue since 2012. Here’s what gives
us confidence in our bright future.
1. We’re in strong markets, and they’re growing. While 2024
was a year of challenge for the aerospace industry, our focus
centered on delivering for our customers, pivoting with them to
meet their evolving needs. Strong maintenance repair overhaul
(MRO) demand as airlines extend the lifespan of their fleet
supplemented original equipment manufacturers’ volume. ATI’s
aerospace revenue grew by 4.5% overall in 2024, and 9% in
jet engines.
Our defense business continues to grow as well—full-year
revenues were up 22%. When the United States and our allies
need reliable, high-performance advanced materials, we’re
honored they turn to ATI. The continued growth of our defense
business demonstrates both demand for our products and
confidence in our ability to deliver.
Combined, aerospace and defense sales exceeded 65% of
fourth-quarter revenue and for the full year represented more
than 62%. As the market recognizes ATI as a premier aerospace
and defense company on track with our strategy, we expect this
mix to continue to grow.
In addition to our core A&D markets, we serve markets that
rely on our differentiated materials, delivering growth and
margins like aerospace. In the electronics and specialty energy
markets, continued demand for high-performance chips and
the resurgence of nuclear energy put our hafnium, niobium and
zirconium alloys in high demand. Medical advancements depend
on our materials, from titanium for joint replacements to nitinol for
life-saving stents and niobium for ever more powerful imaging.
2. We’re well positioned in those markets. We have
extraordinary capabilities, capacity to meet demand, and long-
term agreements that demonstrate our value to our customers.
In 2024, we celebrated $4 billion in new sales commitments
through 2040. Much of the additional revenue—approximately
$2.2 billion—will be delivered in the balance of this decade. The
collective commitments are predominantly for nickel alloys serving
the jet engine market, where ATI’s high-performance materials and
solutions are differentiated the most. We’re proud to be on every
commercial platform flying today—engines and airframes.
We achieved significant milestones in the capacity investments
necessary to capitalize on growing customer demand:
We expanded critical titanium melt capacity. Our new
electron beam furnace in Richland, Washington, continues our
measured, targeted approach to meeting growing demand.
We commissioned powerful new titanium-forging assets. A
new, state-of-the-art 12,500-ton billet forging press critical to
titanium production for aerospace and defense complements
our expanded melt capacity. The Bakers, North Carolina,
press delivers increased capability for the manufacture of
novel high-performance alloys that are challenging to make.
We are solving customer challenges with the most advanced
finishing operation of its kind. Our new bright anneal furnace
in Vandergrift, Pennsylvania, is part of a streamlined,
competitive flow path that is transforming Specialty Rolled
Products by focusing on growing production of high-value,
differentiated materials with the shortest lead times in the
world. It delivers the advantages our customers are hungry
for: best-in-class attributes including thickness, coil size and
cycle times.
3. We’re sharpening our operational advantage—increasing
our efficiency and reliability. Our team gives me great confidence,
as their productivity improvements unlock additional capacity,
giving us the opportunity to participate in transactional business
where we’re valued most. Quality and safety are our priority. Our
team is focused on continuing to improve as we make ATI the
best it can be.
In 2024, we took action to align our asset portfolio with our
strategic focus on aerospace and defense. As a result, we
completed the sale of our precision rolled strip operations in
New Bedford, Massachusetts, and Remscheid, Germany.
WWW.ATIMATERIALS.COM 3
Combined, aerospace and defense sales represented more than 62% of full-year
2024 revenue. As the market recognizes ATI as a premier aerospace and defense
company on track with our strategy, we expect this mix to continue to grow.
Our path to the future.
Our Mission
Solving the World’s Challenges through Materials Science
Our Vision
Deliver performance to create long-term shareholder
value by:
Transforming to be an aerospace and defense leader;
Securing technology leadership in strategic nickel and
titanium applications;
Earning the first call through strong customer relationships
and capabilities.
MESSAGE FROM THE EXECUTIVE CHAIRMAN
Dear Shareholders,
Customers and
Employees,
The past year was marked by many
ATI achievements. Notable among
them, our successful CEO transition
reflected robust and thoughtful
succession planning by ATI’s Board
of Directors. Kim Fields was clearly
ready to lead the organization,
her demonstrated operational and
commercial expertise making her
proven to perform.
On behalf of the Board, I congratulate her and the team
for their 2024 successes and clear commitment to growing
shareholder value. As we look toward the future, your Board
remains committed to serving as effective stewards of that
value and as advocates for our investors’ interests and
concerns. Thank you for your ongoing support of ATI.
All the best,
Robert S. Wetherbee
Executive Chairman
While continuing to invest, we also are committed to returning
capital to our shareholders. To that end, we repurchased $260
million of our outstanding stock during 2024, with $590 million
remaining in our current repurchase authorization as of year-end.
Our commitment to focused execution of our strategic priorities
continues to drive results for our shareholders. It is gratifying to
see our team’s hard work and transformational strategies deliver
meaningful shareholder value. But we’re not stopping here.
There is always more to achieve. We remain nimble in the face of
continuously evolving markets and prevailing geopolitical climate,
guided by our strategy and rooted in our core values.
With each goal met, our team strives to set the bar higher. We do
what we say we’re going to do, when we say we’re going to do it,
and we do it the right way. These values drive shareholder value
creation and permeate our corporate governance, our approach to
talent and culture, and our investor outreach.
It has been my great privilege to take the ATI helm from Bob
Wetherbee, and I thank him for helping to create the opportunities
we see on the horizon. Thank you for your support of ATI.
Sincerely,
Kimberly A. Fields
President and Chief Executive Officer
Our Strategic Priorities
1. Position ATI for the future, clearly defining our destination
and creating a path to succeed.
2. Grow the core, establishing the path to grow revenue and
expand technology leadership.
3. Achieve world-class benchmarks, including inventory
efficiency and operational productivity.
Supported by foundational pillars: Culture and Talent,
Digital Technology, and Product Technology
4 ATI 2024 ANNUAL REPORT
Robert S. Wetherbee
Executive Chairman, ATI
| Executive Member
Kimberly A. Fields
President and CEO, ATI
| Executive Member
We at ATI are committed to a strong governance program. We have
long believed that integrity is vitally important to the success of our
Company. Our Corporate Governance Guidelines, along with the
charters of the Board committees, provide the framework for the
corporate governance of ATI. These Guidelines reflect the Board’s
commitment to oversee the effectiveness of decision-making at the
Board and management levels, with a view toward achieving ATI’s
strategic objectives. This information, and more about our corporate
governance, is available on our website, ATImaterials.com.
Our Code of Conduct applies to all directors, officers, employees,
agents and consultants and sets forth clear standards to guide the
conduct of our daily affairs. Our commitment is to reflect the
highest standards of ethical performance in our dealings with all of
our stakeholders.
Our compliance program incorporates policies to address key
compliance areas for ATI, including antitrust, ethics, environmental
compliance, anti-bribery, export compliance and insider trading,
as well as cybersecurity matters and various human resources
issues, including workplace respect and safety. ATI provides annual
compliance training to its employees on a variety of these topics.
We understand that confidence in our Company is in large measure
dependent upon the reliability and transparency of our financial
statements, including maintaining effective internal control over
financial reporting. Accordingly, our Code of Conduct recognizes
our responsibility for maintaining accurate records that support
timely disclosures that fairly reflect our financial position and results
of operations. Providing timely information that fairly reflects our
financial position and results of operations.
We encourage employees to speak up about any concerns they
may have. The ATI Speak Up Line, which provides confidential, secure
and anonymous reporting capability, is available to all employees 24
hours a day, seven days a week. In addition, our Chief Compliance
Officer, our Human Resources Department, our Law Department and
our managers are confidential resources for employees to surface
their concerns without fear of retaliation. Building and maintaining
trust, respect and communication among our employees is essential
to the effectiveness of our governance program.
Our commitment
to integrity
Don P. Newman
Executive Vice President, Finance, and Chief Financial Officer
Vaishali S. Bhatia
Senior Vice President, General Counsel,
and Chief Compliance Officer
Kimberly A. Fields
President and Chief Executive Officer
ATI BOARD OF DIRECTORS
Leroy M. Ball
President and Chief Executive Officer,
Koppers Holdings, Inc., a leading
integrated global provider of treated
wood products, wood treatment
chemicals and carbon compounds
1 | 3
J. Brett Harvey
Lead Independent Director of ATI.
Retired Chairman and Chief Executive
Officer of CONSOL Energy, Inc., a
leading diversified energy company in
the United States
2 | 3
Herbert J. Carlisle
Retired President and Chief Executive
Officer of the National Defense Industrial
Association (NDIA), and retired United
States Air Force four-star general
1
Carolyn Corvi
Retired Vice President, General
Manager of Airplane Programs of
The Boeing Company
2 | 3
WWW.ATIMATERIALS.COM 5
2024 EXECUTIVE OFFICERS
Robert S. Wetherbee
Executive Chairman
Kimberly A. Fields
President and Chief Executive Officer
Standing committees
1 Audit and Risk
2 Nominating and Governance
3 Compensation and Leadership Development
David P. Hess
Retired EVP and Chief Customer
Officer for Aerospace, United
Technologies Corporation, a
global leader in aerospace and
technology; formerly President,
Pratt & Whitney
2 | 3
David J. Morehouse
Senior Advisor to the President of
the Pittsburgh Steelers
1
Ruby Sharma
Retired Managing Partner, RNB
Strategic Advisors, a strategic
advisory firm, and retired Senior
Partner of Ernst & Young LLP
1
Marianne Kah
Retired Chief Economist for
ConocoPhillips and current
adjunct senior research scholar at
Columbia University’s Center on
Global Energy Policy
1
WWW.ATIMATERIALS.COM 5
Don P. Newman
Executive Vice President, Finance,
and Chief Financial Officer
Tina K. Busch
Senior Vice President, Chief Human
Resources Officer
Vaishali S. Bhatia
Senior Vice President, General Counsel,
and Chief Compliance Officer
Timothy J. Harris
Senior Vice President, Chief Digital
and Information Officer
6 ATI 2024 ANNUAL REPORT
ATI SALES BY END MARKET & 2024 SEGMENT INFORMATION
$2,278
2024 Segment Sales
($ in millions)
High Performance Materials &
Components Segment Sales
Advanced Alloys & Solutions
Segment Sales
$2,084
2024 Segment Sales
($ in millions)
Total ATI Sales
($ in millions)
2022
2023
2024
Jet Engines–Commercial
$1,064
28%
$1,334
32%
$1,458
33%
Airframes–Commercial
469
12%
739
18%
773
18%
Defense
341
9%
402
9%
490
11%
Total Aerospace & Defense
1,874
49%
2,475
59%
2,721
62%
Specialty Energy
276
7%
273
7%
285
7%
Medical
163
4%
177
4%
225
5%
Electronics
200
5%
160
4%
194
4%
Other Core Markets
639
16%
610
15%
704
16%
Conventional Energy
477
13%
415
10%
302
7%
Automotive
302
8%
211
5%
259
6%
Construction & Mining
176
5%
163
4%
159
4%
Other
368
9%
300
7%
217
5%
Industrial Markets
$1,323
35%
$1,089
26%
$937
22%
Total
$3,836
100%
$4,174
100%
$4,362
100%
Jet Engines–Commercial
60%
Airframes–Commercial
16%
Defense
10%
Total Aerospace & Defense
86%
Specialty Energy
4%
Medical
5%
Electronics
0%
Other Core Markets
9%
Conventional Energy
1%
Automotive
1%
Construction & Mining
1%
Other
2%
Industrial Markets
5%
Jet Engines–Commercial
4%
Airframes–Commercial
19%
Defense
13%
Total Aerospace & Defense
36%
Specialty Energy
9%
Medical
6%
Electronics
9%
Other Core Markets
24%
Conventional Energy
14%
Automotive
12%
Construction & Mining
6%
Other
8%
Industrial Markets
40%
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 29, 2024
OR
☐
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
Commission file number 1-12001
ATI Inc.
(Exact name of registrant as specified in its charter)
Delaware
25-1792394
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
2021 McKinney Avenue
Dallas, Texas
75201
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (800) 289-7454
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common stock, par value $0.10
ATI
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant is well known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth
company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐ (Do not check if a smaller reporting company)
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statement. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
On January 31, 2025, the Registrant had outstanding 142,166,931 shares of its Common Stock.
The aggregate market value of the Registrant’s voting stock held by non-affiliates at June 30, 2024 was approximately $6.9 billion, based on the closing price per share of
Common Stock on June 30, 2024 of $55.45 as reported on the New York Stock Exchange. Shares of Common Stock known by the Registrant to be beneficially owned by directors
and officers of the Registrant subject to the reporting and other requirements of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are not included
in the computation. The Registrant, however, has made no determination that such persons are “affiliates” within the meaning of Rule 12b-2 under the Exchange Act.
Documents Incorporated By Reference
Selected portions of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 16, 2025 are incorporated by reference into Part III of this Report.
F-1
INDEX
Page
Number
PART I
Item 1. Business
F-3
Item 1A. Risk Factors
F-9
Item 1B. Unresolved Staff Comments
F-17
Item 1C. Cybersecurity
F-17
Item 2. Properties
F-18
Item 3. Legal Proceedings
F-18
Item 4. Mine Safety Disclosures
F-19
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
F-19
Item 6. [Reserved]
F-20
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
F-20
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
F-38
Item 8. Financial Statements and Supplementary Data
F-40
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
F-90
Item 9A. Controls and Procedures
F-90
Item 9B. Other Information
F-93
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
F-93
PART III
Item 10. Directors and Executive Officers of the Registrant
F-93
Item 11. Executive Compensation
F-93
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
F-94
Item 13. Certain Relationships and Related Transactions, and Director Independence
F-94
Item 14. Principal Accountant Fees and Services
F-94
PART IV
Item 15. Exhibits, Financial Statements and Financial Statement Schedules
F-94
Item 16. Form 10-K Summary
F-97
SIGNATURES
F-2
PART I
Item 1. Business
The Company
ATI Inc. is a Delaware corporation with its corporate headquarters located at 2021 McKinney Avenue, Suite 1100, Dallas, TX
75201, telephone number (800) 289-7454, Internet website address www.atimaterials.com. Our Internet website and content
contained therein or connected thereto are not intended to incorporate into this Annual Report on Form 10-K. References to
“ATI,” the “Company,” “the Registrant,” “we,” “our” and “us” and similar terms mean ATI Inc. and its subsidiaries, unless the
context otherwise requires.
When used in this Annual Report on Form 10-K, unless the context otherwise requires or unless otherwise specified, any
reference to “year” is to the Company’s fiscal year. The Company follows a 4-4-5 or 5-4-4 fiscal calendar, whereby each fiscal
quarter consists of thirteen weeks grouped into two four-week months and one five-week month, and its fiscal year ends on the
Sunday closest to December 31. Fiscal years 2024, 2023 and 2022 ended on December 29, 2024, December 31, 2023, and
January 1, 2023, respectively. All fiscal years presented include 52 weeks of operations.
Our Business
ATI produces specialty materials, highly differentiated by our materials science expertise and advanced process technologies.
Our mission is to solve the world’s challenges through materials science. Our largest markets of aerospace & defense represent
approximately 62% of total sales, led by products for jet engines and airframes. Additionally, we have a strong presence in our
other core markets consisting of specialty energy, medical and electronics markets. In aggregate, these core markets represent
almost 80% of our revenue.
We operate in two business segments: High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions
(AA&S). The HPMC segment’s primary focus is on maximizing jet engine materials and components growth, with
approximately 86% of its revenue derived from the aerospace & defense markets, including nearly 60% of its revenue from
products for commercial jet engines. Commercial aerospace products have been the main source of sales and EBITDA growth
for HPMC over the last several years and are expected to continue to drive HPMC and overall ATI results in the future. HPMC
has also experienced growth in defense products, which comprise almost 10% of total sales. Other core markets include
medical and specialty energy. HPMC produces a wide range of high performance materials, components, and advanced
metallic powder alloys. These products are made from nickel-based alloys and superalloys, titanium and titanium-based alloys,
and a variety of other specialty materials. HPMC’s capabilities range from cast/wrought and powder alloy development to final
production of highly engineered finished components, and 3D-printed aerospace products.
The AA&S segment is focused on delivering high-value flat products, with a focus in aerospace & defense and other core
markets, which comprise approximately 60% of its revenue. Industrial markets comprise the remaining 40% of AA&S sales,
which includes the conventional energy and automotive end-markets. AA&S produces nickel-based alloys, titanium and
titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and strip products.
Strategic end-use markets for our products include:
Aerospace & Defense. We are a world leader in the production of specialty materials and components for both commercial
and military jet engines and airframes supporting customer needs for initial build requirements and for spare parts. We believe
that through alloy development, internal growth efforts, and long-term supply agreements on current and next-generation jet
engines and airframes, we are well-positioned with a fully qualified asset base to meet the expected multi-year demand growth
from the commercial aerospace market.
Typical aerospace applications for nickel-based alloys and superalloys and advanced metallic powders include jet engine disks,
blades, vanes, rings, casings and shafts. Nickel-based alloys and superalloys remain extremely strong at high temperatures and
resist degradation under extreme conditions. Next-generation jet engines use advanced nickel-based superalloys and metallic
powder alloys to enable increased fuel efficiency requirements that require hotter-burning engines. Our specialty materials are
also used in the manufacture of aircraft landing gear and structural components.
We are a global industry leader in iso-thermal and hot-die forging technologies for advanced aerospace components. We
produce highly sophisticated components that have differing mechanical properties across a single product unit and are highly
resistant to fatigue and temperature effects. Our precision forgings are used for jet engine components, structural components
for aircraft, helicopters, space propulsion, and other demanding applications. ATI provides a full range of post-production
inspection and machining with the certified quality needed to meet demanding application requirements.
F-3
Products and components made from titanium and titanium-based alloys, such as jet engine components including disks, blades
and vanes, and airframe components such as structural members, landing gears, and hydraulic systems, are critical in aerospace
applications. These materials and components possess an extraordinary combination of properties that help to increase jet
engine fuel efficiency and product longevity, including superior strength-to-weight ratios, elevated temperature resistance, low
coefficient of thermal expansion, and extreme corrosion resistance.
Availability of titanium supply continues to be a critical issue across the aerospace & defense supply chain. As such, in fiscal
year 2023, we restarted a significant amount of titanium melt capacity in Albany, Oregon with a modest investment and have
continued to invest in additional capacity at this facility, bringing online a fourth furnace in the first half of fiscal year 2024. In
addition, we have further invested in additional titanium melt capacity to meet growing demand at our Richland, Washington
facility, which is expected to begin qualifications in the second quarter of 2025. When our Richland, Washington expansion is
at full production in late fiscal year 2025, our total titanium melt capacity is expected to be 80% greater than our fiscal year
2022 titanium melt capacity.
Our specialty materials and components for defense applications include naval nuclear products, military jet engines, fixed
wing and rotorcraft products, armor applications and munitions materials. We expect to continue to increase our sales in
government defense applications in future years.
We continuously seek to develop and manufacture innovative new alloys to better serve the needs of the aerospace & defense
markets, and several of the alloys we produce have won significant share in current and next-generation jet engines. ATI’s
metallic powder technology delivers alloy compositions and refined microstructures that offer increased performance and
longer useful lives in high-temperature aerospace environments, as well as improved efficiency of jet engines. We continue to
increase our production capacity for advanced metallic powders for use in next-generation aerospace products, including
additive manufacturing applications. In fiscal year 2023, ATI established a dedicated additive manufacturing and post-
processing facility near Fort Lauderdale, Florida which achieved its first print in fiscal year 2024. This facility will allow ATI
to tap into significant aerospace and defense demand for additively manufactured laser powered bed fusion parts, serving both
commercial and defense customers.
Energy. We also serve energy markets, with a focus on specialty energy, which includes nuclear power generation and gas
turbines. Our specialty materials are widely used in the global electrical power generation and distribution industries. We
believe clean energy needs, expanding global environmental policies and the electrification of developing countries will
continue to drive demand for our specialty materials and products for use in these industries over the long term.
Our specialty materials, including corrosion-resistant alloys (CRAs), are used in nuclear, natural gas and other electrical power
generation fuel source applications, including for pipe, tube, and heat exchanger applications in water systems and in pollution
control scrubbers. We are an industry pioneer in producing nuclear reactor fuel cladding and structural components utilizing
zirconium and hafnium alloys for use in nuclear power generation. We also are a technology leader for large diameter
components used in natural gas land-based turbines for power generation, and our alloys are used for alternative energy
generation, including solar, fuel cell and geothermal applications.
Both of our business segments also produce specialty materials that are critical to the conventional energy market, which
includes oil & gas and chemical and hydrocarbon processing industries. The environments in which oil & gas can be found in
commercial quantities have become more challenging, involving deep offshore wells, high pressure and high temperature
conditions in sour wells and unconventional sources. These challenging offshore environments are located further off the
continental shelf, including locations in arctic and tropical waters where drilling is more difficult than previously-sourced
locations. Our specialty materials, including nickel-based alloys, duplex alloys and other specialty alloys, have the strength
and corrosion-resistant properties necessary to meet these challenging operating conditions. We enable our customers’ success
in these applications by developing and producing specialty materials for equipment that can operate for up to 30 years in these
harsh environments.
Medical. ATI’s advanced specialty materials are used in medical device products that enhance the quality of lives around the
world.
Manufacturers of magnetic resonance imaging (MRI) devices rely on our niobium superconducting wire to help produce
electromagnetic fields that allow physicians to safely scan the body’s soft tissue. We have a joint technology development
agreement with Bruker Energy & Supercon Technologies to advance state-of-the-art niobium-based superconductors, including
those used in MRI magnets for the medical industry, and preclinical MRI magnets used in the life-science tools industry.
Our specialty alloys also are used for replacement knees, hips and other prosthetic devices. The use of our alloys in these
replacement devices offers the potential for longer product lifespans versus previous implant generations.
Our biocompatible nickel-titanium (nitinol) shape memory alloy is used for stents to support collapsed or clogged blood
vessels. Reduced in diameter for insertion, these stents expand post-implant to their original tube-like shape due to the metal’s
superelasticity. In addition, our ultra fine diameter (0.002 inch/0.051 mm) titanium wire is used for screens to prevent blood
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clots from entering critical areas of the body. We have a strategic partnership with Confluent Medical Technologies
(Confluent) whereby Confluent has begun to provide a $50 million investment in our capacity expansion to produce nitinol. As
a result of this expansion, we expect to more than triple our production of this life saving alloy by fiscal year 2027.
Electronics. ATI’s materials perform a variety of important roles in the growing consumer electronics market. Nickel alloys
and Precision Rolled Strip® (PRS) from Specialty Rolled Products (SRP) and our Asian PRS joint venture are used in
computers and smart phones. The magnetic properties of nickel alloys are used in relay cores, magnets and magnetic shielding,
while their thermal expansion is useful in glass-to-metal sealing applications such as monitors. PRS is selected for electronics
and communications applications based on corrosion resistance, strength, wear resistance, electrical resistivity or thermal
expansion.
In addition, metal precursors – which use chemicals produced by ATI, such as hafnium – have a variety of important
applications in consumer and industrial electronics.
Business Segments
Our two business segments accounted for the following percentages of total revenues of $4.4 billion, $4.2 billion, and $3.8
billion for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.
Fiscal Year Ended
December 29, 2024
December 31, 2023
January 1, 2023
High Performance Materials & Components
52 %
51 %
43 %
Advanced Alloys & Solutions
48 %
49 %
57 %
Information with respect to our business segments is presented below and in Note 18 of the notes to the consolidated financial
statements.
High Performance Materials & Components Segment
Our HPMC segment produces a wide range of high performance specialty materials, parts and components for several of our
core markets, including aerospace & defense, medical, and specialty energy, with approximately 86% of fiscal year 2024
revenues derived from the aerospace & defense markets. Most of the products in this segment are sold directly to end-use
customers, and a substantial portion of our HPMC segment products are sold under multi-year agreements. Demand for our
products is driven primarily by the commercial aerospace cycle. Large aircraft and jet engines are manufactured by a small
number of companies, such as The Boeing Company (Boeing), Airbus S.A.S. (an Airbus Group company) including the former
operations of Bombardier Aerospace, and Empresa Brasileira de Aeronáutica S.A. (Embraer) for airframes. GE Aerospace,
Rolls-Royce plc, Pratt & Whitney (a division of Raytheon Technologies Corporation), Safran Aircraft Engines, formerly known
as Snecma (a division of Safran Group), and various joint ventures manufacture jet engines. These companies and their
suppliers form a substantial part of our customer base in this business segment. We have long-term agreements (LTAs) in place
with most major aerospace market original equipment manufacturers (OEMs). The loss of one or more of our customers in the
aerospace or defense markets could have a material adverse effect on ATI’s results of operations and financial condition (see
Item 1A. Risk Factors).
Within this segment, our products are manufactured from a wide range of advanced materials including metallic powder alloys
made from nickel-based alloys and superalloys, titanium and titanium-based alloys, and a variety of other specialty materials.
These materials are made into a variety of product forms that include precision forgings, machined parts and others. We are
integrated across these alloy systems in melt, forging, finishing, testing and machining processes.
Principal competitors in the HPMC segment include: Berkshire Hathaway Inc., for nickel-based alloys and superalloys and
specialty steel alloys, titanium and titanium-based alloys, and precision forgings through its ownership of Precision Castparts
Corporation and subsidiaries; Howmet Aerospace Inc., for titanium and titanium-based alloys; Carpenter Technology
Corporation for legacy nickel-based alloys and superalloys and specialty steel alloys; VSMPO-AVISMA for titanium and
titanium-based alloys; and Aubert & Duval for precision forgings.
Advanced Alloys & Solutions Segment
Our AA&S segment produces nickel-based alloys, titanium and titanium-based alloys, and specialty alloys in a variety of forms
including plate, sheet, and PRS products. The major end markets for our flat rolled products are specialty and conventional
energy, aerospace & defense, automotive, medical and electronics markets. The operations in this segment include our SRP
and Specialty Alloys & Components businesses in addition to our Shanghai STAL Precision Stainless Steel Company Limited
(STAL) PRS joint venture in China, in which we hold a 60% interest.
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Nickel-based alloys, titanium, and stainless sheet products are used in a wide variety of industrial and consumer applications.
In fiscal year 2024, approximately 30% of our stainless sheet products by volume were sold to independent service centers,
which have slitting, cutting or other processing facilities, with the remainder sold directly to end-use customers.
Nickel-based alloy, titanium, and specialty alloy plate products are primarily used in aerospace & defense, and corrosion and
industrial markets. In fiscal year 2024, approximately 35% of our plate products by volume were sold to independent service
centers, with the remainder sold directly to end-use customers.
PRS products, which are under 0.015 inches thick, are used by customers to fabricate a variety of products primarily in the
automotive and electronics markets. In fiscal year 2024, approximately 90% of these products by volume were sold directly to
end-use customers or through our own distribution network, with the remainder sold to independent service centers. With the
sale of our New Bedford, MA PRS business in 2024, PRS sales in this segment will be significantly reduced going forward.
Competitors for nickel-based alloys and superalloys and specialty alloys include Haynes International and VDM Metals GmbH,
a subsidiary of Acerinox S.A.
Raw Materials and Supplies
Substantially all raw materials and supplies required in the manufacture of our products are available from more than one
supplier, and the sources and availability of raw materials essential to our businesses are currently adequate. The principal raw
materials we use in the production of our specialty materials are scrap (including iron-, nickel-, chromium-, titanium-, and
molybdenum-bearing scrap), nickel, titanium sponge, zirconium sand and sponge, ferrochromium, ferrosilicon, molybdenum
and molybdenum alloys, manganese and manganese alloys, cobalt, niobium, vanadium, hafnium and other alloying materials.
While we enter into raw materials futures contracts from time to time to hedge exposure to price fluctuations, such as for nickel,
we cannot be certain that our hedge position adequately reduces exposure. We believe that we have adequate controls to
monitor these contracts, but we may not be able to accurately assess exposure to price volatility in the markets for critical raw
materials.
Some raw materials, such as nickel, titanium sponge, cobalt, and ferrochromium, are available to us and our specialty materials
industry competitors primarily from foreign sources. Some of these foreign sources are in countries that may be subject to
unstable political and economic conditions, which could disrupt supplies or affect the price of these materials. Further changes
in global trade policies could materially impact the total cost of imported materials.
We source our raw materials through a variety of producers located throughout the world, including the United States (U.S.).
The following is a summary of the primary source countries of raw materials that play an important role in our products:
•
Nickel: Canada, Norway, Japan, Finland, and South Africa.
•
Zirconium: U.S. and China.
•
Hafnium: U.S. and China.
•
Cobalt: Norway and Japan.
•
Chromium: the United Kingdom (U.K.), South Africa, Germany and Turkey.
•
Niobium: Brazil.
•
Molybdenum: U.S., Brazil, and China.
•
Titanium sponge: Japan, Kazakhstan, Saudi Arabia, and China
Certain key supplies used in melting and other processing operations, such as graphite electrodes and industrial gases including
helium and argon, are from time-to-time limited in availability and may be subject to significant price inflation. We enter into
long-term supply contracts where possible to ensure an adequate supply of these products. However, overall industry shortages
may impact our operations and scheduling.
Export Sales and Foreign Operations
International sales represent approximately 42% of our total annual sales, with direct export sales by our U.S.-based operations
to customers in foreign countries accounting for approximately 33% of our total sales. Our overseas sales, marketing and
distribution efforts are aided by our international marketing team or by independent representatives throughout the world.
Changes in global trade policies may negatively impact our international sales if export or import tariffs increase the cost of our
products.
Our HPMC segment has manufacturing capabilities for precision forging and machining in Poland, primarily serving the
aerospace, construction & mining and transportation markets. In fiscal year 2024, the Company completed the sale of its
precision rolled strip operations in Remscheid, Germany, which was part of the HPMC segment. In fiscal year 2022, the
Company completed the sale of its Sheffield, U.K. operations, which included facilities for melting and re-melting, machining
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and bar mill operations, and was part of the HPMC segment. Within our AA&S segment, our Asian joint venture makes PRS
products, which enables us to offer these products more effectively to markets in China and other Asian countries.
Backlog, Seasonality and Cyclicality
Our backlog of confirmed orders was approximately $3.9 billion at December 29, 2024 and $3.8 billion at December 31, 2023.
We expect that approximately 70% of confirmed orders on hand at December 29, 2024 will be filled during fiscal year 2025.
Our HPMC segment’s backlog of confirmed orders was approximately $3.3 billion at December 29, 2024 and $3.0 billion at
December 31, 2023. We expect that approximately 70% of the confirmed orders on hand at December 29, 2024 for this
segment will be filled during fiscal year 2025. Our AA&S segment’s backlog of confirmed orders was approximately $0.6
billion at December 29, 2024 and $0.8 billion at December 31, 2023. We expect that approximately 85% the confirmed orders
on hand at December 29, 2024 for this segment will be filled during fiscal year 2025.
Demand for our products is cyclical over longer periods because specialty materials customers generally operate in cyclical
industries and are subject to changes in general economic conditions and other factors both external and internal to those
industries. Historically, the HPMC segment typically has experienced modest seasonal weakness in the third quarter of each
fiscal year due to many European customers, particularly in the aerospace supply chain, taking plant outages during this
summer period. ATI also typically performs corresponding annual preventative maintenance outages at several facilities during
this same period.
Research, Development and Technical Services
We believe that our research and development capabilities give ATI a competitive advantage in developing new products and
manufacturing processes that contribute to the long-term profitable growth potential of our businesses. We conduct research
and development at our various operating locations both for ourselves and, on a limited basis, for customers on a contract basis.
Research and development expenditures for the fiscal years ended December 29, 2024, December 31, 2023, and January 1,
2023 included the following:
Fiscal Year Ended
(In millions)
December 29, 2024
December 31, 2023
January 1, 2023
Company-Funded:
High Performance Materials & Components
$
10.4 $
9.6 $
8.4
Advanced Alloys & Solutions
8.4
10.2
7.3
Corporate
0.8
0.9
0.6
19.6
20.7
16.3
Customer-Funded:
High Performance Materials & Components
2.5
1.4
1.4
Total Research and Development
$
22.1 $
22.1 $
17.7
Our research, development and technical service activities are closely interrelated and directed toward development of new
products, improvement of existing products, quality assurance, development of new manufacturing methods, improvement of
existing manufacturing methods, and reducing our manufacturing costs. The increase in our research and development
expenditures in fiscal years 2024 and 2023 was largely related to efforts to develop and/or refine materials and manufacturing
methods for products supporting the aerospace & defense markets.
We own hundreds of U.S. patents, many of which are also filed under the patent laws of other nations. Although these patents,
as well as our numerous trademarks, technical information, license agreements, and other intellectual property, have been and
are expected to be of value, we believe that the loss of any single such item or technically related group of such items would not
materially affect the conduct of our business.
Environmental, Health and Safety Matters
We are subject to various domestic and international environmental laws and regulations that govern the discharge of pollutants
and disposal of wastes, and which may require that we investigate and remediate the effects of the release or disposal of
materials at sites associated with past and present operations. We could incur substantial cleanup costs, fines, civil or criminal
sanctions, third party property damage or personal injury claims as a result of violations or liabilities under these laws or non-
compliance with environmental permits required at our facilities. We are currently involved in the investigation and
remediation of a number of our current and former sites as well as third party sites.
We consider environmental compliance to be an integral part of our operations. We have a comprehensive environmental
management and reporting program that focuses on compliance with applicable federal, state, regional and local environmental
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laws and regulations. Each operating company has an environmental management system that includes mechanisms for
regularly evaluating environmental compliance and managing changes in business operations while assessing environmental
impact.
Safety is one of our core values. We strive for a zero injury culture committed to the safety of our people, our products, and the
communities in which we operate. Our fiscal year 2024 OSHA Total Recordable Incident Rate was 1.39 per 200,000 hours and
our Lost Time Case Rate was 0.26 per 200,000 hours. Nearly all of our domestic employees are working in an ATI facility that
has achieved its ISO 45001 certification.
Human Capital Management
We believe that our people and culture are a competitive differentiator. We attract, develop, and retain purpose and
performance-driven leaders. Those leaders build teams with diverse, empowered and fulfilled employees who want to stay and
grow with the company. As of December 29, 2024, we employed approximately 7,700 active employees, 15% of whom are
located outside the U.S. across 15 countries.
Our Culture: At the center of our commitment to excellence are our values, which drive how we succeed: Accountability,
Integrity, Innovation, Safety & Sustainability, and Teamwork & Respect.
We continuously strive to cultivate and support a highly engaged and productive workforce. We actively seek opportunities for
listening and communication by our CEO and other senior executive leaders with our employees. Annually, we conduct a
confidential company-wide engagement survey that offers our employees the ability to provide feedback and valuable insight to
identify opportunities for improvement and support employee engagement and our overall human capital strategy.
Governance: The Compensation and Leadership Development Committee of our Board oversees the Company’s human capital
management policies and procedures, including its workforce and professional development and diversity and inclusion
initiatives, and is responsible for establishing and administering the policies governing annual compensation and long-term
compensation to ensure the policies are designed to align compensation with our overall business strategy and performance to
link to the interests of our stockholders.
Our Code of Conduct establishes the baseline requirements of our integrity and compliance program and promotes an
environment where everyone is treated ethically and with respect. It outlines our pledge to recognize the dignity of each
individual, respect each employee, provide compensation and benefits that are competitive, promote self-development through
training, and value diversity of perspectives and ideas. Employees complete Business Conduct and Ethics training and, where
permitted by law, are asked to certify each year that they will comply with the Code.
Talent Acquisition: Our performance and development process is integrated in the ATI business strategy, and is a key
component to recruiting, hiring, and developing top-performing talent. We believe in providing a welcoming, engaging and
inclusive assessment and interviewing process that encourages people from all backgrounds to consider ATI. Our hiring
practices include a goal that position candidate slates be composed at least 30% of diverse candidates. Further, we partner with
top academic institutions that have programs relevant to our business, external professional organizations, trade schools and
high schools to enhance the diversity of our workforce and identify materials science, STEM and other relevant expertise.
Learning and Development: Developing talent and leaders at all levels of the organization is critical to our long-term success.
We have leadership and management development programs as well as broad learning opportunities for our employees to
support their career growth and advance their skills. By providing a consistent and comprehensive learning experience, we
focus on growing top talent across the enterprise and enhancing Front Line Leader development. Additionally, we maintain a
formal talent review process to work in connection with performance management for systematic career development and
succession planning at both the individual employee and organizational levels.
Compensation and Benefits: We provide market-based competitive compensation through our salary, annual incentive and
long-term incentive programs and robust benefits packages that promote the well-being of our employees across all aspects of
their lives. Eligible employees are compensated for their contributions to achievement of our goals with both short-term cash
incentives and long-term equity-based incentives. We believe the structure of our compensation packages provides the
appropriate incentives to attract, retain, and motivate our employees.
Our well-being focus addresses physical, mental, financial, and individual needs, providing benefits and resources to help
employees and their families be their best, both personally and professionally. We have implemented several campaigns to
promote well-being and help provide visibility to resources and available benefits. We offer Employee Assistance Programs
with therapy sessions to employees and family members, comprehensive mental health benefits to those enrolled in the U.S.
medical plan, virtual mental health options and navigation tools to improve access and speed of care, and preventive/mental
health resilience programs.
Inclusion and Diversity: Our long tradition of innovation and operational excellence demands the contributions of leaders and
team members with a wide array of characteristics, backgrounds, experiences, knowledge, and skills. We believe our business
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success is intricately tied to cultivating a culture in which all members of our workforce are included and empowered to do their
best work.
We recognize the benefits and importance of diversity amongst our board and management. As of December 29, 2024, women
made up 40% of our Board, and 10% of our Directors were racially diverse.
Labor Relations and Collective Bargaining: Approximately 35% of our workforce is covered by various collective bargaining
agreements (CBAs), predominantly with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied &
Industrial Service Workers International Union (USW). The Company is currently renegotiating CBAs, which expire on
February 28, 2025, that cover approximately 1,100 USW-represented full-time employees within our AA&S operations. There
can be no assurance that the Company will successfully conclude these renegotiations to replace the expiring CBAs.
Available Information
Our Internet website address is www.atimaterials.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as well as proxy and information statements and other information that we file, are available
free of charge through our Internet website as soon as reasonably practicable after we electronically file such material with, or
furnish such material to, the U.S. Securities and Exchange Commission (“SEC”). Our Internet website and the content
contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K. The SEC
maintains an Internet website at www.sec.gov, which also contains reports, proxy and information statements and other
information that we file electronically with the SEC. We routinely post important information on our website,
www.atimaterials.com, in the “Investors” section. We also may use our website as a means of disclosing material, non-public
information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the
Investors section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations
and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference
into, and is not a part of, this document.
Item 1A. Risk Factors
There are inherent risks and uncertainties associated with our business that could adversely affect our operating performance
and financial condition. Set forth below are descriptions of those risks and uncertainties that we currently believe to be
material, but the risks and uncertainties described are not the only risks and uncertainties that could affect our business. See the
discussion under “Forward-Looking Statements” in Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations, in this Annual Report on Form 10-K.
RISKS RELATED TO CYCLICAL NATURE OF OUR BUSINESS
Cyclical Demand for Products. The cyclical nature of the industries in which our customers operate causes demand for our
products to fluctuate, creating potential uncertainty regarding future profitability. Various changes in general economic
conditions may affect the industries in which our customers operate. These changes could include decreases in the rate of
consumption or use of our customers’ products due to economic downturns. Other factors that may cause fluctuation in our
customers’ positions are changes in market demand, lower overall pricing due to domestic and international overcapacity,
currency fluctuations, lower priced imports and increases in use or decreases in prices of substitute materials. As a result of
these factors, our profitability has been and may in the future be subject to significant fluctuation.
Risks Associated with the Commercial Aerospace Industry. A significant portion of our sales represent products sold to
customers in the commercial aerospace industry. Fulfilling contractual arrangements to provide various products to customers
in this industry often involves meeting highly exacting performance requirements and product specifications, and our failure to
meet those requirements and specifications on a timely and cost-efficient basis could have a material adverse effect on our
results of operations, business and financial condition. The commercial aerospace industry has historically been cyclical due to
factors both external and internal to the airline industry. These factors include general economic conditions, airline
profitability, consumer demand for air travel, varying fuel and labor costs, changes in projected build rates, price competition,
and international and domestic political conditions such as military conflict and the threat of terrorism. The length and degree
of cyclical fluctuation are influenced by these factors and therefore are difficult to predict with certainty. Demand for our
products is subject to these cyclical trends. Cyclical and event-driven downturns in the commercial aerospace industry have
had, and may in the future have, an adverse effect on the prices at which we are able to sell our products, and our results of
operations, business and financial condition could be materially adversely affected.
Risks Associated with Cyclicality in General Industrial Markets. Our exposure to general industrial markets is primarily in
our AA&S segment, where we have sales to the oil & gas industry, automotive, food equipment & appliances and construction
and mining markets. These markets tend to be highly cyclical and subject to volatility as a result of fluctuations in worldwide
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economic activity and associated demand, changes in applicable regulation, global geopolitical conditions and numerous other
factors. Demand for our products, particularly within the AA&S segment, is subject to these trends, and in recent years, our
business has at times been negatively impacted by depressed demand from general industrial markets. We expect that these end
markets will remain highly cyclical. Future downturns in these markets could have an adverse effect on the prices at which we
are able to sell our products, and our results of operations, business and financial condition could be materially adversely
affected.
Product Pricing. From time-to-time, reduced demand, intense competition, and excess manufacturing capacity have resulted in
reduced prices, excluding raw material surcharges, for many of our products. These factors, recent inflationary trends for
certain critical raw material costs, and potential international trade actions, as discussed below, have had and may have an
adverse impact on our revenues, operating results, and financial condition.
We change prices on certain of our products from time-to-time. Our ability to implement price increases is dependent on
market conditions, economic factors, raw material costs and availability, competitive factors, operating costs and other factors,
some of which are beyond our control. As such, we may be unable to implement price increases to the degree or within the
time frame necessary to fully mitigate the impact of inflationary trends, including those resulting from changes in trade policy,
or at all, and the benefits of any price increases may be delayed due to long manufacturing lead times and the terms of existing
contracts.
Risks Associated with Key Customers. We have long-term contracts with certain of our customers, some of which are subject
to renewal, renegotiation, or re-pricing at periodic intervals or upon changes in competitive supply conditions. Our failure to
successfully renew, renegotiate or favorably re-price such agreements, or a material deterioration in or termination of these or
other key customer relationships, could result in a reduction or loss in customer purchase revenue. Additionally, a significant
downturn or deterioration in the business or financial condition or loss of a key customer could negatively impact our business.
Our customers may change their business strategies or modify their business relationships with us, including to reduce the
amount of our products they purchase or to switch to alternative suppliers, as a result of which our financial condition and
results of operations may be adversely affected.
RISKS RELATED TO THE RAW MATERIALS AND SUPPLIES THAT WE USE
Dependence on Critical Raw Materials Subject to Price and Availability Fluctuations. We rely to a substantial extent on third
parties to supply certain raw materials that are critical to the manufacture of our products. Purchase prices and availability of
these critical items are subject to volatility, and in some cases, we have supply arrangements with only a limited number of
suppliers for a given material. At any given time, we may be unable to obtain an adequate supply of these critical raw materials
on a timely basis, on price and other terms acceptable to us, or at all. If suppliers increase the price of critical raw materials, we
may not have alternative sources of supply. In addition, to the extent that we have quoted prices to customers and accepted
customer orders for products prior to purchasing necessary raw materials, or have existing contracts, we may be unable to raise
the price of products to cover all or part of the increased cost of the raw materials. We source some of these materials from
China, which has and may in the future continue to impose export controls that could limit or significantly delay our access to
such materials and could compel us to identify alternative sources, which we may not be able to do in a timely fashion or at all.
The prices for many of the raw materials we use have been volatile during the past several years. Due to the long lead times
required to manufacture many of our products, volatility in raw material prices exposes us to cash costs that may not be fully
recovered through surcharge and index pricing mechanisms. Recently, due to inflationary trends, certain critical raw material
costs, such as nickel, hafnium, titanium sponge, cobalt, chromium, and molybdenum and scrap containing iron, nickel, titanium,
chromium, and molybdenum have been volatile and they may continue to be so in the future, including as a result of changes in
international trade policy. While we have been able to mitigate some of the adverse impact of volatile raw material costs
through various means, including the application of raw material surcharges or pricing indices to customers, rapid changes in
raw material costs cause volatility in, and may adversely affect, our results of operations.
The manufacture of some of our products is a complex process and requires long lead times. As a result, we may experience
delays or shortages in the supply of raw materials. In particular, we acquire certain important raw materials that we use to
produce specialty materials, including nickel, zirconium, niobium, chromium, cobalt, vanadium and titanium sponge, from
foreign sources. Some of these sources operate in countries that may be subject to unstable political and economic conditions.
These or similar conditions may disrupt supplies or affect the prices of the materials that are necessary to our operations. If
unable to obtain adequate and timely deliveries of required raw materials, we may be unable to timely manufacture sufficient
quantities of products. This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm
to our reputation.
Dependence on Critical Supplies Subject to Price and Availability Fluctuations. We rely on third parties for certain supplies,
such as graphite electrodes and industrial gases including helium and argon that are critical to the manufacture of our products.
Purchase prices and availability of these critical items are subject to volatility. At any given time, we may be unable to obtain
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an adequate supply of these critical supplies on a timely basis, on price and other terms acceptable to us, or at all. If suppliers
increase the price of these items, we may not have alternative sources of supply. The manufacture of some of our products is a
complex process and requires long lead times. As a result, we may experience delays or shortages of critical supplies. If
unable to obtain adequate and timely deliveries of required supplies, we may be unable to timely manufacture sufficient
quantities of products. This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm
to our reputation.
Availability of Energy Resources. We rely upon third parties for our supply of energy resources consumed in the manufacture
of our products. The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile
market conditions. These market conditions often are affected by political and economic factors and by supply and demand
trends that are beyond our control. Disruptions in the supply of energy resources could temporarily impair our ability to
manufacture products for customers. Further, increases in energy costs, or changes in costs relative to energy costs paid by
competitors, has and may continue to adversely affect our profitability. To the extent that these uncertainties cause suppliers
and customers to be more cost sensitive, increased energy prices may have an adverse effect on our results of operations and
financial condition.
The ongoing conflict between Russia and Ukraine may adversely affect our business and results of operations.
Since February 2022, Russia and Ukraine have been engaged in active armed conflict. The length, impact, and outcome of the
ongoing conflict and its potential impact on our business is highly volatile and difficult to predict. It has and could continue to
cause significant market and other disruptions, including significant volatility in commodity prices and supply of energy
resources, instability in financial markets, supply chain interruptions, political and social instability, trade disputes or trade
barriers, changes in consumer or purchaser preferences, and increases in cyberattacks and espionage.
Governments in the European Union, the U.S., the U.K. and other countries have enacted sanctions against Russia and Russian
interests. These sanctions include controls on the export, re-export, and in-country transfer in Russia of certain goods, supplies,
and technologies, and the imposition of restrictions on doing business with certain state-owned Russian customers and other
investments and business activities in Russia. We terminated our Uniti, LLC joint venture with Russian-based VSMPO-
AVISMA (Verkhnaya Salda Metallurgical Production Association - Berezniki Titanium-Magnesium Works), the purpose of
which was to market and sell a range of commercially pure titanium products. However, conditions in Ukraine and/or existing
or future sanctions may disrupt supplies or affect the prices of materials that are necessary to our operations. If unable to obtain
adequate and timely deliveries of required raw materials, we may be unable to timely manufacture sufficient quantities of
products. This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm to our
reputation.
Further, the broader consequences of the current conflict between Russia and Ukraine may also have the effect of heightening
many other risks disclosed in our public filings, any of which could materially and adversely affect our business and results of
operations. Such risks include, but are not limited to, adverse effects on global macroeconomic conditions; increased volatility
in the price and demand of oil, natural gas and other commodities, increased exposure to cyberattacks; disruptions in global
supply chains; and exposure to foreign currency fluctuations and potential constraints or disruption in the capital markets and
our sources of liquidity.
RISKS RELATED TO OUR WORKFORCE
Risks Associated with the Recruitment and Retention of Key Talent and the Sustainability of our Workforce. Our business
and manufacturing processes are complex. We require highly skilled personnel with relevant industry and technical experience
to effectively operate, and as such, depend on our ability to recruit, retain and motivate our employees. Shortages in skilled
labor and other labor market pressures currently are resulting in greater competition for skilled labor and increased labor costs
in some instances. If we fail to attract, develop, retain and motivate a sustainable workforce with the skills and in the locations
we need to operate and grow our business, our operations could be adversely impacted.
In addition, the loss of key members of management and other personnel could negatively impact our business, and any
unplanned turnover, or failure to develop adequate succession plans for key positions, could result in loss of technical or other
expertise or institutional knowledge, delay or impede the execution of our strategic plans and priorities and, ultimately,
negatively impact our business and results.
Labor Matters. We have approximately 7,700 active employees, of which approximately 15% are located outside the U.S.
Approximately 35% of our workforce is covered by various CBAs, predominantly with the USW. At various times, our CBAs
expire and are subject to renegotiation. Generally, CBAs that expire may be terminated after notice by the union. After
termination, the union may authorize a strike. A labor dispute, which could lead to a strike, lockout, or other work stoppage by
the employees covered by one or more of the collective bargaining agreements, could have a material adverse effect on
production at one or more of our facilities and, depending upon the length of such dispute or work stoppage, on our operating
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results. There can be no assurance that we will succeed in obtaining CBAs to replace those that expire. The Company is
currently renegotiating CBAs, which expire on February 28, 2025, that cover approximately 1,100 USW-represented full-time
employees within our AA&S operations. There can be no assurance that the Company will successfully conclude these
renegotiations to replace the expiring CBAs.
RISKS RELATED TO INTELLECTUAL PROPERTY, INFORMATION TECHNOLOGY AND SECURITY
Risks Associated with our Intellectual Property. We own valuable intellectual property, including trade secrets, patents,
trademarks and copyrights. Our intellectual property protects our investments in technological innovation, research and
development, and plays an important role in maintaining our competitive position in the markets we serve. Despite efforts to
secure our intellectual property, it may be infringed or misappropriated by our employees, our competitors or other third parties.
The pursuit of remedies for infringement or misappropriation of intellectual property is expensive and uncertain. Additionally,
our competitors may develop technologies of their own that are similar or superior to our proprietary technologies, or design
around our patents, to lawfully avoid our intellectual property rights. A failure to sufficiently secure or successfully enforce our
intellectual property rights could adversely affect our business and competitive position.
Risks Associated with Digital Technology. Information technology infrastructure is critical to supporting business objectives;
failure of our information technology infrastructure to operate effectively could adversely affect our business. If a problem
occurs that impairs this infrastructure, the resulting disruption could impede our ability to record or process orders, manufacture
and ship in a timely manner, or otherwise carry on business in the normal course. Any such events could cause us to lose
customers or revenue and could require us to incur significant remediation expense. As we integrate, implement and deploy
new information technology processes and information infrastructure across our operations, we could experience disruptions in
our business that could have an adverse effect on our business, financial condition, results of operations and cash flow.
Cybersecurity Threats. Increased global information technology threats, vulnerabilities, and a rise in sophisticated and targeted
international computer crime pose a risk to the security of our systems and networks and the confidentiality, availability and
integrity of our data. We believe that ATI faces the threat of such cyberattacks due to the markets we serve, the products we
manufacture, the locations of our operations, and global interest in our technology. Due to the evolving nature of cybersecurity
threats, the scope and impact of any incident cannot be predicted. We continually work to strengthen our threat
countermeasures, safeguard our systems and mitigate potential risks. Despite our efforts to fortify our cybersecurity and protect
sensitive information and confidential and personal data, our facilities and systems and those of our third-party service
providers may be vulnerable to security breaches. A significant security breach could lead to unanticipated disclosure,
modification or destruction of proprietary and other key information, production downtimes, operational disruptions, and
remediation costs, which in turn could adversely affect our reputation, competitiveness and results of operations.
RISK RELATED TO CLIMATE CHANGE AND OTHER ENVIRONMENTAL MATTERS
Risks Associated with Climate Change.
While the prospect of a lower-carbon economy presents a number of opportunities for our business, the physical impacts of
climate change, regulatory efforts to transition to a lower-carbon economy in the regions in which we, our customers and our
suppliers operate, and the increased focus and evolving views of our various stakeholders on climate change issues could create
risks to our business.
Physical Risk. Climate related changes in prevailing weather patterns may impact, among other conditions, changes in sea
levels and the propensity for flooding in coastal and other regions, long-term changes in precipitation patterns leading to
flooding, drought or deterioration in water quality, and increases in the frequency and severity of significant storms and other
weather events and related natural hazards, such as wildfire risk. Although we do not believe that our facilities are currently
exposed to significant physical risk as a general matter, our operations have at times been, and could in the future be, impacted
by adverse climate-related events, such as, for example, unanticipated periods of extreme cold or heat, acute flooding and wide-
spread wildfires such as those experienced in certain regions in the U.S. and elsewhere in recent years. Events such as these
could cause damage to critical facilities and equipment, result in significant operational disruption and have meaningfully
adverse effects on our employees and the communities in which we operate. Additionally, even to the extent that significant
weather events or changes in climate conditions do not directly impact our own facilities and/or operations, our business could
be negatively impacted by events or more chronic climate conditions that disrupt or force longer-term changes in operations for
our significant customers or suppliers, which could negatively impact the timing or overall volume of demand for our products
or the cost and availability of critical raw materials, among other factors. Over time, widespread physical climate changes and
risks could drive increases in other operational costs for our business, such as insurance costs.
Regulatory and Other Transition Risks. Increased worldwide focus on climate change has led to legislative and regulatory
efforts to combat both potential causes and adverse impacts of climate change. New or more stringent laws and regulations
related to greenhouse gas emissions, water usage and other climate change related concerns may adversely affect us, our
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suppliers and our customers. We have publicly disclosed efforts to reduce certain environmental impacts, including greenhouse
gas (GHG) emissions of our operations, and provide for our compliance with applicable environmental regulations.
Nevertheless, new and evolving laws and regulations could mandate different or more restrictive standards; increase operating
costs; require (or cause customers to require that we make) capital investments to transition to low carbon technologies or
purchase carbon credits; or otherwise adversely impact our ongoing operations. Our suppliers may face similar challenges and
incur additional compliance costs that are passed on to us. These direct and indirect costs may adversely impact our results.
Market and Reputational Risks. Technology to support the transition to lower-carbon operations within the timeframe that
could be required by future regulation or expected in the future by our customers may not be available at the scale necessary to
support our operations, in a timely or cost-effective manner or at all. It is possible that, over time, due to both regulatory action
and/or changing customer and societal norms and expectations regarding the causes and importance of climate change issues,
demand for products in one or more of our significant end markets could decline or, if we fail to keep pace with changing
demand and technological advancement, shift in favor of products that we do not produce. If we fail to appropriately adapt to
the expectations of our customers or other stakeholders, fail to achieve or properly report progress toward our environmental
sustainability goals and targets or otherwise are perceived as failing to adequately address climate change concerns, the
resulting negative perceptions could adversely affect our business, reputation and access to capital.
Risks Associated with Other Environmental Compliance Matters. We are subject to various domestic and international
environmental laws and regulations that govern the discharge of pollutants and disposal of wastes, and which may require that
we investigate and remediate the effects of the release or disposal of materials at sites associated with past and present
operations. We could incur substantial cleanup costs, fines and civil or criminal sanctions, third party property damage or
personal injury claims as a result of violations or liabilities under these laws or non-compliance with environmental permits
required at our facilities. We are currently involved in the investigation and remediation of a number of our current and former
sites as well as third party sites. We also could be subject to future laws and regulations that govern greenhouse gas emissions
and various matters related to climate change and other air emissions, which could increase our operating costs. With respect to
proceedings brought under the federal Superfund laws, or similar state statutes, we have been identified as a potentially
responsible party (PRP) at 41 of such sites, excluding those at which we believe we have no future liability. Our involvement is
limited or de minimis at approximately 19 of these sites, the potential loss exposure with respect to 14 individual sites is not
considered to be material, and the potential loss exposure on the remaining 8 sites could be material. We are a party to various
cost-sharing arrangements with other PRPs at many of the sites. The terms of the cost-sharing arrangements are subject to non-
disclosure agreements as confidential information. Nevertheless, the cost-sharing arrangements generally require all PRPs to
post financial assurance of the performance of the obligations or to pre-pay into an escrow or trust account their share of
anticipated site-related costs. In addition, the Federal government, through various agencies, is a party to several such
arrangements.
From time-to-time, we are a party to lawsuits and other proceedings involving alleged violations of, or liabilities arising from,
environmental laws. When our liability is probable and we can reasonably estimate our costs, we record environmental
liabilities in our financial statements. In many cases, we are not able to determine whether we are liable or if liability is
probable or to reasonably estimate the loss or range of loss. Estimates of our liability remain subject to additional uncertainties,
including the nature and extent of site contamination, available remediation alternatives, the extent of corrective actions that
may be required, and the participation number and financial condition of other PRPs, as well as the extent of their responsibility
for the remediation. We intend to adjust our accruals to reflect new information as appropriate. Future adjustments could have
a material adverse effect on our results of operations in a given period, but we cannot reliably predict the amounts of such
future adjustments. At December 29, 2024, our reserves for environmental matters totaled approximately $15 million. Based
on currently available information, we do not believe that there is a reasonable possibility that a loss exceeding the amount
already accrued for any of the sites with which we are currently associated (either individually or in the aggregate) will be an
amount that would be material to a decision to buy or sell our securities. Future developments, administrative actions or
liabilities relating to environmental matters, however, could have a material adverse effect on our financial condition or results
of operations.
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OTHER OPERATIONAL AND STRATEGIC RISKS
Risks Associated with Disruptions to our Manufacturing Processes. The manufacture of many of our products is a highly
exacting and complex process. If we encounter disruptions to our manufacturing processes due to equipment malfunction,
failure to follow specific protocols, specifications and procedures, supply chain interruptions, natural disasters, health
pandemics, labor unrest, or otherwise, it could have an adverse impact on our ability to fulfill orders or on product quality or
performance which could result in significant costs to and liability for us that could have a material adverse effect on our
business, financial condition or results of operations, as well as negative publicity and damage to our reputation, which could
adversely impact product demand and customer relationships. Additionally, our operations depend on the continued and
efficient functioning of our facilities, including critical equipment. If our operations, particularly one of our manufacturing
facilities, were to be materially disrupted for any reason, we may be unable to effectively meet our obligations to or demand
from our customers, which could adversely affect our financial performance.
Export Sales and International Trade Matters. We believe that export sales will continue to account for a significant
percentage of our future revenues. We also import certain raw materials that are important to our business, including nickel,
zirconium, niobium, chromium, hafnium, cobalt, vanadium and titanium sponge, among others. Risks associated with such
international trade include, among others: political and economic instability, including weak conditions in the world’s
economies; accounts receivable collection; export controls; trade sanctions; changes in legal and regulatory requirements;
policy changes affecting the markets for our products; changes in tax laws, including taxes on repatriation of foreign earnings;
and exchange rate fluctuations (which may affect sales to international customers and the value of profits earned on export sales
when converted into dollars). Any of these factors could materially adversely affect our results for the period in which they
occur. We source some materials from China, which has and may in the future continue to impose export controls that could
limit or significantly delay our access to such materials and could compel us to identify alternative sources, which we may not
be able to do in a timely fashion or at all.
Additionally, global trade policy may, at times, be volatile and unpredictable, and changes in international trade duties and
other aspects of international trade policy, both in the U.S. and abroad, could materially impact our business. Tariffs, or other
changes in U.S. trade policy, have resulted in and may continue to trigger, retaliatory actions by affected countries. At times,
certain foreign governments have instituted or considered imposing trade sanctions on certain U.S. goods, or taking action to
deny U.S. companies access to critical raw materials, in response to U.S. trade actions, and these or other foreign governments
could continue or expand upon these actions in the future. A “trade war” of this nature or other governmental action related to
tariffs or international trade agreements or policies has the potential to adversely impact demand for our products, our costs,
customers, suppliers and/or the U.S. economy or certain sectors thereof and, thus, to adversely impact our businesses.
Risks Associated with Strategic Capital Projects and Maintenance Activities. From time to time, we undertake strategic
capital projects in order to enhance, expand and/or upgrade our facilities and operational capabilities. Our ability to achieve the
anticipated increased revenues or otherwise realize acceptable returns on these investments or other strategic capital projects
that we may undertake is subject to a number of risks, many of which are beyond our control, including a variety of market,
operational, permitting, and labor-related factors. In addition, the cost to implement any given strategic capital project
ultimately may prove to be greater than originally anticipated. If we are not able to achieve the anticipated results from the
implementation of any of our strategic capital projects, or if we incur unanticipated implementation costs or delays, our results
of operations and financial position may be materially adversely affected. Additionally, we periodically undertake maintenance
activities, routine or otherwise, involving facilities and pieces of equipment that are key to our operations, and it is possible that
unanticipated maintenance needs, or unanticipated circumstances arising in connection with planned maintenance activities
could result in equipment outages that are longer, or costs that exceed, those originally anticipated. Significant repair delays or
unanticipated costs associated with these activities could have a negative impact on our results of operations and financial
condition.
Risks Associated with Current or Future Litigation and Claims. A number of lawsuits, claims and proceedings have been or
may be asserted against us relating to the conduct of our currently and formerly owned businesses, including those pertaining to
product liability, patent infringement, commercial disputes, government contracting, employment matters, employee and retiree
benefits, taxes, environmental matters, health and safety and occupational disease, and stockholder and corporate governance
matters. Due to the uncertainties of litigation, we can give no assurance that we will prevail on all claims made against us in the
lawsuits that we currently face or that additional claims will not be made against us in the future. While the outcome of
litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to
us, we do not believe that the disposition of any such pending matters is likely to have a material adverse effect on our financial
condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material
adverse effect on our results of operations for that period. Also, we can give no assurance that any other claims brought in the
future will not have a material effect on our financial condition, liquidity or results of operations.
F-14
In August 2024, the Company received notice that it and certain of its affiliates are parties to two lawsuits, filed in federal
district court for the Western District of Pennsylvania, that assert various claims associated with the Company’s October 2023
purchase of group annuity contracts to transfer a portion of its U.S. qualified defined benefit pension plan obligations to Athene
Annuity and Life Company and Athene Annuity & Life Assurance of New York. These two lawsuits were consolidated in late
2024, and in January 2025, we filed a motion to dismiss the consolidated claims. We intend to vigorously defend against these
claims, but given the preliminary nature of these matters, cannot predict their outcome or estimate any range of reasonably
possible loss at this time.
Risks Associated with Insurance Coverage. We have maintained various forms of insurance, including insurance covering
claims related to our properties and risks associated with our operations. Our existing property and liability insurance
coverages contain exclusions and limitations on coverage. From time-to-time, in connection with renewals of insurance, we
have experienced additional exclusions and limitations on coverage, larger self-insured retentions and deductibles, and
significantly higher premiums. As a result, in the future, our insurance coverage may not cover claims to the extent that it has
in the past and the costs that we incur to procure insurance may increase significantly, either of which could have an adverse
effect on our results of operations.
Risks Associated with Acquisition and Disposition Strategies. We intend to continue to strategically position our businesses to
improve our ability to compete. Strategies we employ to accomplish this may include seeking new or expanding existing
specialty market niches for our products, expanding our global presence, acquiring businesses complementary to existing
strengths, and continually evaluating the performance and strategic fit of our existing business units and their components.
From time-to-time, management holds discussions with management of other companies to explore acquisitions, joint ventures,
and other business combination opportunities, as well as possible asset acquisitions or dispositions. As a result, the relative
makeup of the businesses comprising our Company is subject to change. Acquisitions, joint ventures, and other business
combinations involve various inherent risks, such as: the relative accuracy of our assessment of the value, strengths,
weaknesses, contingent and other liabilities and potential profitability of acquisition or other transaction candidates; the
potential loss of key personnel of an acquired business; unanticipated conditions or events that impact our ability to achieve
identified financial and operating synergies, growth or other benefits anticipated to result from an acquisition or other
transaction; and unanticipated changes in business and economic conditions. The relative success of any business or asset
acquisitions and other similar transactions, particularly any cross-border transaction, also could be negatively affected by export
controls, exchange rate fluctuations, domestic and foreign trade policy and other geopolitical conditions, changes in tax laws
and deterioration in domestic and foreign economic conditions.
Risks Associated with Government Contracts. Some of our operating units perform contractual work directly or indirectly for
the U.S. Government, which requires compliance with laws and regulations relating to the performance of Government
contracts. Various claims (whether based on U.S. Government or Company audits and investigations or otherwise) could be
asserted against us related to our U.S. Government contract work. Depending on the circumstances and the outcome, such
proceedings could result in fines, penalties, compensatory and treble damages or the cancellation or suspension of payments
under one or more U.S. Government contracts. Under government regulations, a company, or one or more of its operating
divisions or units, can also be suspended or debarred from government contracts based on the results of investigations.
Risks Related to Wide-Spread Public Health Crises. The COVID-19 pandemic, including governmental and other actions
taken or restrictions imposed to contain its spread and impact, subjected our operations, financial performance and financial
condition to a number of risks. In general, our facilities continued to operate throughout the pandemic with federal and state
government approvals because our facilities were deemed essential and critical. However, we experienced, and may again in
the context of future similar events experience, the temporary shut-down of facilities. The significant macroeconomic impact of
the COVID-19 pandemic and the measures designed to contain its spread also negatively impacted several of the Company’s
most significant end markets, and our sales to customers in those markets. Any future similar event could impact our business,
results of operations, financial condition and/or cash flows in similar respects, but the ultimate breadth and duration of any such
future event and its impacts on our business are difficult to predict.
Political and Social Turmoil. The war on terrorism, as well as global political and social turmoil, generally, could put pressure
on economic conditions in the U.S. and worldwide. These political, social and economic conditions could make it difficult for
us, our suppliers, and our customers to forecast accurately and plan future business activities, and could adversely affect the
financial condition of our suppliers and customers and affect customer decisions as to the amount and timing of purchases from
us. As a result, our business, financial condition and results of operations could be materially adversely affected.
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RISKS ASSOCIATED WITH OUR INDEBTEDNESS; OTHER FINANCIAL AND FINANCIAL ACCOUNTING
RISKS
Risks Associated with Indebtedness. Our substantial indebtedness could adversely affect our business, financial condition or
results of operations and prevent us from fulfilling our obligations under our outstanding indebtedness. As of December 29,
2024, our total consolidated indebtedness was approximately $1.9 billion. We also had the ability to borrow approximately
$525 million under our Asset Based Lending (ABL) credit facility as of December 29, 2024. This substantial level of
indebtedness increases the risk that we may be unable to generate enough cash to pay amounts due in respect of our
indebtedness. Our substantial indebtedness could have important consequences to our stockholders and significant effects on
our business. For example, it could:
•
make it more difficult for us to satisfy our obligations with respect to our outstanding indebtedness;
•
increase our vulnerability to general adverse economic and industry conditions;
•
require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness,
thereby reducing the availability of our cash flow to fund working capital, capital expenditures, our strategic
growth initiatives and development efforts and other general corporate purposes;
•
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
•
restrict us from taking advantage of business opportunities;
•
place us at a competitive disadvantage compared to our competitors that have less indebtedness; and
•
limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service
requirements, execution of our business strategy or other general corporate purposes.
A portion of our indebtedness, including amounts outstanding currently or in the future under our ABL, bear interest at variable
rates and, accordingly, subject our business to risk, particularly in a rising interest rate environment. In addition, the
agreements that govern our current indebtedness contain, and the agreements that may govern any future indebtedness that we
may incur may contain, financial and other restrictive covenants that could limit our ability to engage in activities that may be
in our long-term best interests. Our failure to comply with those covenants could result in an event of default that, if not cured
or waived, could result in the acceleration of all of our debt.
Risks Associated with Retirement Benefits. On October 17, 2023, we purchased group annuity contacts from an insurer
covering approximately 85% of our U.S. qualified defined benefit plan obligations. Under these contracts, we transferred the
pension obligations and associated assets for the significant majority of our remaining plan participants to the selected insurance
company. Using our long-term weighted average expected rate of return on pension plan assets and other actuarial
assumptions, we do not expect to have any significant minimum cash funding requirements to our pension plan for at least ten
years. However, these estimates are based on various assumptions and are subject to significant uncertainty, including with
respect to the performance of our pension trust assets, and our expectations therefore could prove to be inaccurate.
Significantly lower than expected returns on our pension assets could result in otherwise unanticipated pension contribution
obligations in the future. Depending on the timing and amount, a requirement that we fund the U.S. qualified defined benefit
pension plan could have a material adverse effect on our results of operations and financial condition.
Goodwill or Long-Lived Asset Impairments. We have various long-lived assets that are subject to impairment testing. We
review the recoverability of goodwill annually, or more frequently whenever significant events or changes in circumstances
indicate that the recorded goodwill of a reporting unit may be below that reporting unit’s fair value. Our businesses operate in
highly cyclical industries, such as commercial aerospace, and as such, our estimates of future cash flows, market demand, the
cost of capital, and forecasted growth rates and other factors may fluctuate, which may lead to changes in estimated fair value
and, therefore, impairment charges in future periods. For the fiscal year 2024 annual goodwill impairment evaluation, both of
our reporting units with goodwill had fair values that were in excess of carrying value. Additionally, we have a significant
amount of property, plant and equipment and acquired intangible assets that may be subject to impairment testing, depending on
factors such as market conditions, the demand for our products, and facility utilization levels. Any determination requiring the
impairment of a significant portion of goodwill or other long-lived assets has had, and may in the future have, a negative impact
on our financial condition and results of operations.
Internal Controls Over Financial Reporting. Because of its inherent limitations, internal control over financial reporting may
not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
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Risks Associated with Our Guidance and Other Targets and Expectations. From time to time, we may announce earnings
guidance and other future targets or goals for our business. Such information, which consists of forward-looking statements, is
based on our then current expectations, estimates, forecasts and projections about the operating environment, economies and
markets in which we operate. Future targets and goals reflect our beliefs and assumptions and our perception of historical
trends, then current conditions and expected future developments, as well as other factors appropriate in the circumstances. As
such, while sometime presented with numerical specificity, earnings guidance and other statements regarding our future targets
and goals are inherently speculative in nature and subject to significant business, economic, competitive and other uncertainties
and contingencies regarding future events, including the risks discussed herein. Our actual results can, and likely will, be
different, and those differences could be material. There can be no assurance that any targets or goals established by us will be
accomplished at the levels or by the dates targeted, if at all. Failure to achieve our targets or goals may have a material adverse
effect on our business, financial condition, results of operations or the market price of our securities.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
The Company and its Board recognize the critical significance that cybersecurity has to our operations and the need to
continually assess cybersecurity risk and evolve our response in the face of a rapidly and ever-changing environment. We face
a range of increasing and evolving cybersecurity threats common to industrial operations and other enterprises, which continue
to grow in frequency and scope. See Item 1A, Risk Factors, “Cybersecurity Threats.”
The programs and procedures we have implemented to mitigate our exposure to these threats focus on preventing cybersecurity
incidents, preserving the confidentiality, security and availability of the information that we generate or collect and store, and
effectively responding to cybersecurity incidents if they occur.
Our Comprehensive Program
We take a comprehensive, standards-driven approach to our cybersecurity through an enterprise-wide cybersecurity program
aligned with the National Institute on Standards and Technology’s Cybersecurity Framework. Our program includes an
extensive set of systems, network and application-level controls that protect our corporate data and systems. Our Chief Digital
and Information Officer (“CDIO”) and our Chief Information Security Officer (“CISO”), each of whom have extensive
cybersecurity training and expertise and more than 20 years and 14 years of information technology and cybersecurity
experience, respectively, hold primary responsibility within management for assessing, monitoring and managing our
cybersecurity risks and program. They are supported by a dedicated, enterprise-wide cybersecurity team that, with the
assistance of third-party providers, monitors our program and controls, as well as available cybersecurity intelligence, on a
continuous basis to ensure that, as an organization, we are informed of emerging risks, identify specific threats and potential
incidents, and promptly escalate the evaluation and management of identified incidents as appropriate. Components of our
comprehensive program include, among others:
•
Technical Safeguards. We deploy technical safeguards that are designed to protect the Company’s information
systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware
functionality and access controls, which are evaluated through vulnerability assessments and cybersecurity threat
intelligence.
•
Third-Party Risk Management. We maintain a risk-based approach to identifying and overseeing cybersecurity risks
presented by third parties.
•
Program Assessments. We engage in regular assessments and testing of our policies and procedures, including efforts
such as audits and similar assessments, tabletop exercises, threat modeling, vulnerability testing and other procedures
focused on evaluating program effectiveness. Additionally, we periodically engage third parties to perform
assessments of our cybersecurity measures, including information security maturity assessments and independent
reviews of our information security control environment and operating effectiveness.
•
Education and Awareness. We conduct a regular program of enterprise-wide communication and training regarding
cybersecurity threats and the policies and procedures we have implemented in response. These programs are designed
to elevate threat awareness within the Company and equip our employees with the knowledge and access to resources
that they need to appropriately respond to and address the cybersecurity risks that we face.
•
Incident Response and Recovery. We maintain extensive incident response and recovery plans and procedures that
provide a documented framework for handling high severity security incidents. These plans ensure the appropriate
escalation, evaluation, management and reporting of cybersecurity incidents in a prompt and appropriately cross-
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functional manner, facilitating coordination across multiple parts of the Company, and are the subject of regular table-
top breach simulations and other exercises and evaluations.
•
Insurance Coverage. We maintain a cybersecurity risk insurance policy to protect the Company against computer-
related incidents and losses.
We have not experienced any operational or financial impact as a result of any cybersecurity incident or the cybersecurity risk
that we face, and at this time, while the threat of a cybersecurity incident is always present, we view our comprehensive
mitigation strategies and procedures as appropriately calibrated safeguards against any material impact to our results of
operation and financial condition as a result of a cybersecurity incident and believe that we are prepared to appropriately
mitigate and respond to such an incident, should it occur.
Governance
Our Board is actively engaged in the oversight of our digital technology risk management and cybersecurity programs. As part
of its program of regular oversight, the Audit and Risk Committee oversees ATI’s digital technology and cybersecurity risk.
The regular review and assessment of the Company’s cybersecurity program and related policies, standards, processes and
practices is a fully integrated component of the Company’s overall enterprise risk management program, and at least quarterly
as a key component of each regularly scheduled meeting, the Committee receives regular reports from our CDIO on the
Company’s cybersecurity risk profile, the functioning of its cybersecurity program, including with reference to key
performance indicators and other specific, quantitative measures, and other digital technology risks.
Item 2. Properties
Our principal domestic facilities for our HPMC segment include melting operations and production facilities that perform
processing and finishing operations. Domestic melting operations are located in Monroe and Bakers, NC, and Richland, WA
(vacuum induction melting, vacuum arc re-melt, electro-slag re-melt, plasma melting, electron beam melting). Production of
high performance materials, most of which are in long product form, takes place at our domestic facilities in Monroe and
Bakers, NC, Richburg, SC, and Oakdale, PA. Our production of highly engineered forgings and machined components takes
place at facilities in Cudahy, Appleton and Coon Valley, WI, East Hartford, CT, and Irvine, CA. Metal alloy-based additive
manufacturing for the aerospace & defense industries takes place in our leased facility in Fort Lauderdale, Florida.
Within the AA&S segment, our production of zirconium, hafnium, niobium and related specialty alloys takes place at facilities
located in Millersburg, OR and Huntsville, AL. Nickel melting operations are located in Lockport, NY (vacuum induction
melting, vacuum arc re-melt, and electro-slag re-melt), and titanium melting operations are located in Albany, OR (vacuum arc
re-melt). Our principal AA&S locations for melting flat-rolled specialty materials are located in Brackenridge and Latrobe, PA.
Hot-rolling is performed at our domestic facilities in Brackenridge and Washington, PA. Finishing of our flat-rolled products
takes place at our domestic facilities located in Vandergrift, Washington, Rochester, Monaca, and Zelienople, PA.
Additionally, the AA&S segment will benefit from the expanded capabilities at our new Pageland, SC location. Substantially
all of our properties are owned.
We own or lease facilities, primarily sales and administrative offices, in a number of foreign countries, including France,
Germany, the U.K., Poland, and the People’s Republic of China. We also own highly engineered forging and machining
operations in Stalowa Wola, Poland. Through our STAL joint venture, we operate facilities for finishing PRS products in the
Xin-Zhuang Industrial Zone, Shanghai, China.
Our corporate headquarters in Dallas, TX and employee resource center in Pittsburgh, PA are leased.
Although our facilities vary in terms of age and condition, we believe that they have been well maintained and are in sufficient
condition for us to carry on our activities. See Item 7. “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” for further discussion of these impacts.
Item 3. Legal Proceedings
From time to time, we become involved in various lawsuits, claims and proceedings relating to the conduct of our current and
formerly owned businesses, including those pertaining to product liability, environmental, health and safety matters and
occupational disease (including as each relates to alleged asbestos exposure), as well as patent infringement, commercial,
government contracting, construction, employment, employee and retiree benefits, taxes, environmental, and stockholder and
corporate governance matters. While we cannot predict the outcome of any lawsuit, claim or proceeding, our management
believes that the disposition of any pending matters is not likely to have a material adverse effect on our financial condition or
liquidity. The resolution in any reporting period of one or more of these matters, including those described above, however,
could have a material adverse effect on our results of operations for that period.
In August 2024, the Company received notice that it and certain of its affiliates are parties to two lawsuits captioned (1)
William L. Schoen, Mary J. Nesbit, Robin L. Rosewicz, George E. Poole and James E. Swartz, Jr., individually and as
F-18
representatives of a class of participants and beneficiaries of the Allegheny Technologies Incorporated Pension Plan v. ATI
Inc., The Allegheny Technologies Incorporated Pension Plan Administrative Committee, State Street Global Advisors Trust
Co., and John Does 1-5 (Case No. 2:24-cv-01109) and (2) John Souza and Karen Souza, individually and as representatives on
behalf of a class of similarly situated persons v. ATI Inc. and State Street Global Advisors Trust Co. (Case No. 2:24-cv-01214),
both of which are filed in federal district court for the Western District of Pennsylvania. These lawsuits, which were
consolidated in late 2024, assert various claims associated with the Company’s October 2023 purchase of group annuity
contracts to transfer a portion of its U.S. qualified defined benefit pension plan obligations to Athene Annuity and Life
Company and Athene Annuity & Life Assurance of New York. We filed a Motion to Dismiss the consolidated claims on
January 27, 2025. We dispute and intend to vigorously defend against these claims, but given the preliminary nature of these
matters, cannot predict their outcome or estimate any range of reasonably possible loss at this time.
Information relating to legal proceedings is included in Note 21. Commitments and Contingencies of the Notes to Consolidated
Financial Statements and incorporated herein by reference.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Common Stock Prices
Our common stock is traded on the New York Stock Exchange (symbol ATI). At January 31, 2025, there were 1,660 record
holders of ATI Inc. common stock. Currently, we do not pay a dividend. The future payment of dividends and the amount of
such dividends would depend upon matters deemed relevant by our Board of Directors, such as our results of operations,
financial condition, cash requirements, prospects, any limitations imposed by law, credit agreements or senior securities, and
other factors deemed appropriate. Further, our ABL credit facility restricts our ability to pay dividends in certain
circumstances. For more information on the restrictions under our ABL credit facility, see Note 16 of Item 8. “Financial
Statements and Supplementary Data.”
Sales of Equity Securities
Set forth below is information regarding our stock repurchases during the fourth quarter of fiscal year 2024, comprised of
shares repurchased by ATI under the $700 million repurchase program authorized by our Board of Directors in September 2024
and shares repurchased by ATI from employees to satisfy employee-owed taxes on share-based compensation.
Fiscal Period
Total Number of
Shares (or Units)
Purchased (a)
Average Price Paid
per Share (or Unit)
(b) (c)
Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Number
(or Approximate
Dollar Value) of
Shares (or Units) that
May Yet Be
Purchased Under the
Plans or Programs
September 30-November 3, 2024
140,556 $
54.08
131,494 $
653,000,054
November 4-December 1, 2024
778,615 $
55.35
777,064 $
610,000,045
December 2-29, 2024
351,042 $
56.99
351,042 $
590,000,054
Total
1,270,213 $
55.66
1,259,600 $
590,000,054
(a) Includes shares repurchased by ATI from employees to satisfy employee-owed taxes on share-based compensation.
(b) Share repurchases are inclusive of amounts for any relevant commissions.
(c) Excludes excise taxes incurred on share repurchases.
F-19
Cumulative Total Stockholder Return
The graph set forth below shows the cumulative total stockholder return (i.e., price change plus reinvestment of dividends) on
our common stock from December 29, 2019 through December 29, 2024, as compared to the S&P 500 Index, the S&P MidCap
400 Industrials Index and the Russell 2000 Index. The graph assumes that $100 was invested on December 29, 2019. The
stock performance information included in this graph is based on historical results and is not necessarily indicative of future
stock price performance.
Comparison of Cumulative Five Year Total Return
ATI
S&P 500 Index
S&P MidCap 400 Industrials Index
Russell 2000 Index
Dec 2019
Dec 2020
Dec 2021
Dec 2022
Dec 2023
Dec 2024
$60
$80
$100
$120
$140
$160
$180
$200
$220
$240
$260
$280
Company / Index
Dec 2019
Dec 2020
Dec 2021
Dec 2022
Dec 2023
Dec 2024
ATI
100.00
81.17
77.11
144.53
220.09
268.39
S&P 500 Index
100.00
118.40
152.39
124.79
157.59
199.99
S&P MidCap 400 Industrials Index
100.00
116.49
149.62
132.42
174.04
198.82
Russell 2000 Index
100.00
119.96
137.74
109.59
128.14
143.77
Source: Standard & Poor’s
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain statements contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations
are forward-looking statements. Actual results or performance could differ materially from those encompassed within such
forward-looking statements as a result of various factors, including those described below. Net income and net income per
share amounts referenced below are attributable to ATI Inc. and Subsidiaries. The following discussion on the Company’s
results of operations, financial condition and liquidity for the year ended December 29, 2024 (fiscal year 2024) as compared to
the year ended December 31, 2023 (fiscal year 2023) is presented. Information on the Company’s results of operations,
financial condition and liquidity for fiscal year 2023 as compared to the year ended January 1, 2023 (fiscal year 2022) is
included in our Annual Report on Form 10-K in Item 7. “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” filed on February 23, 2024 and is incorporated herein by reference.
ATI Overview
ATI is a global manufacturer of technically advanced specialty materials and complex components. Our largest markets are
aerospace & defense, representing approximately 62% of total sales, led by products for jet engines and airframes.
Additionally, we have a strong presence in our other core markets consisting of the specialty energy, medical and electronics
markets. In aggregate, these core end markets represent almost 80% of our revenue. ATI is a market leader in manufacturing
differentiated products that require our materials science capabilities and unique process technologies, including our new
product development competence.
We operate in two business segments: HPMC and AA&S. The HPMC segment’s primary focus is on maximizing jet engine
materials and components growth, with approximately 86% of its revenue derived from the aerospace & defense markets
including nearly 60% of its revenue from products for commercial jet engines. Commercial aerospace products have been the
main source of sales and EBITDA growth for HPMC over the last several years and are expected to continue to drive HPMC
and overall ATI results in the future. HPMC has also experienced growth in defense products, which comprise almost 10% of
F-20
total sales. Other core markets include medical and specialty energy. HPMC produces a wide range of high performance
materials, components, and advanced metallic powder alloys. These products are made from nickel-based alloys and
superalloys, titanium and titanium-based alloys, and a variety of other specialty materials. HPMC’s capabilities range from
cast/wrought and powder alloy development to final production of highly engineered finished components, and 3D-printed
aerospace products.
The AA&S segment is focused on delivering high-value flat products, with a focus on aerospace & defense and other core
markets, which comprise approximately 60% of its revenue. Industrial markets comprise the remaining 40% of AA&S sales,
which includes the conventional energy and automotive end-markets. AA&S produces nickel-based alloys, titanium and
titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and strip products.
Overview of Fiscal Year 2024 Financial Performance
Sales in fiscal year 2024 increased 5%, to $4.4 billion, and gross profit increased 12%, to $898 million, compared to fiscal year
2023, reflecting increased demand for products within our aerospace & defense and other core markets of medical, electronics,
and specialty energy, which was partially offset by softness in industrial end markets. International sales, including both U.S.
exports and foreign sales from our foreign manufacturing operations, were $1.8 billion in fiscal year 2024 and represented 42%
of total sales, compared to $1.9 billion or 46% of total sales in fiscal year 2023.
Results for fiscal year 2024 included $17 million of net pre-tax gains and fiscal year 2023 included $104 million of net pre-tax
charges as further described in the Results of Operations section below. The Company’s net income for fiscal year 2024 was
$367.8 million, or $2.55 per share. ATI Adjusted EBITDA for fiscal year 2024 was $729.1 million, or 16.7% of sales,
compared to $634.6 million, or 15.2% of sales, for fiscal year 2023. See further explanation below for non-GAAP definitions
and calculations.
A summary of our results is as follows:
Fiscal Year
(Dollars in millions, except per share amounts)
2024
2023
Sales
$ 4,362.1
$ 4,173.7
Gross profit
$
898.2
$
802.6
Gross profit % of sales
20.6 %
19.2 %
Operating income
$
608.9
$
466.4
Income before income taxes
$
486.1
$
295.2
Net income attributable to ATI
$
367.8
$
410.8
Diluted net income attributable to ATI per common share
$
2.55
$
2.81
Our major accomplishments during fiscal year 2024 include the following:
•
Year-over-year sales growth of approximately 5%, with ATI’s 2024 sales representing our highest total since 2012.
Fiscal year 2024 sales to the aerospace & defense markets increased 10% and represent 62% of our total sales,
compared to 59% of total sales in fiscal year 2023. We achieved 15% year-over-year sales growth in our other core
markets, including increases of 27% and 22% in the medical and electronics markets, respectively. Sales to our
aerospace & defense and other core markets increased 11% compared to fiscal year 2023.
•
Growth in the aerospace & defense and other core markets drove higher adjusted EBITDA, which improved by
15%, and to 16.7% as a percentage of sales, a 150 basis point improvement compared to 2023, reflecting robust
demand that we expect will continue in 2025.
•
We generated cash flow of $407.2 million from operating activities in fiscal year 2024 as we continued efforts to
focus on operational improvements to positively impact the inventory intensity of our business and alleviate the
required investment of managed working capital in our growing business. Managed working capital as a percent of
sales was 30.9% as of December 29, 2024, compared to 31.0% as of December 31, 2023, despite an increase in 2024
sales of 5%. We ended the year with $721 million of cash on hand and $1.3 billion of total liquidity including the
undrawn capacity under our ABL credit facility.
•
We completed the sale of non-core assets, including our precision rolled strip operations in New Bedford, MA and
Remscheid, Germany, generating approximately $65 million in proceeds that will be redeployed to support our
strategy to improve operational efficiency.
•
In 2024, we continued to return cash to our shareholders through the repurchase of our stock. We repurchased 5.3
million shares of ATI stock for $260 million, using all the remaining $150 million under the plan approved by our
Board of Directors in November 2023 and $110 million under the $700 million plan approved in 2024.
F-21
•
We made progress in deleveraging our balance sheet. During the third quarter of 2024, we redeemed the $291.4
million outstanding principal amount of ATI’s 3.5% Convertible Senior Notes due 2025 (2025 Convertible Notes)
by issuing 18.8 million shares of ATI stock. In addition, we received cash proceeds of $76 million to settle the
capped call associated with these notes.
Results of Operations
Fiscal Year 2024 Compared to Fiscal Year 2023
Fiscal year 2024 sales increased $188.4 million to $4.4 billion compared to fiscal year 2023, primarily due to increased demand
for next generation commercial engine products and for defense applications and commercial airframes. This increase in sales
to the aerospace & defense markets was complemented by an increase in sales across our other core markets, primarily for the
medical and electronics end markets. These increases were partially offset by softness in certain industrial markets, particularly
the conventional energy market.
Our gross profit was $898.2 million, or 20.6% of sales, a $96 million increase compared to fiscal year 2023. Gross profit in
fiscal year 2024 included a benefit of $16.7 million related to the recognition of previously deferred employee retention tax
credits, of which $9.0 million of the benefit was recognized in the HPMC segment and $7.7 million in the AA&S segment.
Gross profit in fiscal years 2024 and 2023 was also favorably impacted by tax credits of $22.7 million and $10.1 million,
respectively. These tax credits were recognized as a reduction in cost of sales by our AA&S segment and are the result of the
Advanced Manufacturing Production Credit (AMPC) that was part of the Inflationary Reduction Act of 2022. Operating
income was $608.9 million for fiscal year 2024, compared to $466.4 million for fiscal year 2023.
Results for fiscal year 2024 included $16.7 million of net pre-tax benefits, which consisted of the following:
•
$52.9 million gain on the sale during the fourth quarter of 2024 of our precision rolled strip operations in New
Bedford, MA, which was part of the Specialty-Rolled Products business in the AA&S segment, and Remscheid,
Germany, which was part of our European business in the HPMC segment. In fiscal year 2023, these operations had
external sales of approximately $100 million and income before tax of approximately $6 million.
•
$22.1 million of restructuring and other charges, consisting of $11.3 million of start-up costs, $4.6 million of charges
for the restructuring of our European operations, $4.1 million for severance-related restructuring charges primarily for
cost reduction actions in our domestic operations and $2.1 million of transaction costs.
•
$14.1 million of pension remeasurement losses for the immediate recognition of actuarial losses from the
remeasurement of the projected benefit obligation and plan assets for defined benefit pension plans in the fourth
quarter of fiscal year 2024.
Results for fiscal year 2023 included $104.3 million of net pre-tax charges, which consisted of the following:
•
$0.6 million loss on the sale of our Northbrook, IL operations.
•
$35.2 million of restructuring and other charges, consisting of $11.5 million of start-up costs, $14.1 million primarily
for asset write-offs associated with the restructuring of our European operations and the closure of our Robinson, PA
operations, $1.9 million of costs associated with an unplanned outage at our Lockport, NY melt facility, and $7.7
million of severance-related charges primarily for the restructuring of our European operations and involuntary
reductions across ATI’s domestic operations.
•
$41.7 million pension settlement loss associated with actions taken as part of our pension derisking strategy. On
October 17, 2023, we completed a voluntary cash out for term vested employees and annuity buyouts covering 8,200
U.S. qualified defined benefit pension plan participants.
•
$26.8 million of pension remeasurement losses for the immediate recognition of actuarial losses from the
remeasurement of the projected benefit obligation and plan assets for defined benefit pension plans in the fourth
quarter of fiscal year 2023.
The items discussed above are included in operating income on the consolidated statements of operations, with the exception of
the pension related gains and losses in fiscal years 2024 and 2023. Further, the items discussed above are excluded from
segment EBITDA.
Fiscal year 2024 results also include charges of $11.8 million, primarily reported in selling & administrative expenses and
related to a commercial negotiation with a customer. HPMC segment results reflect $6.3 million of this charge, while the
remaining $5.5 million is reflected in the AA&S segment results.
Nonoperating retirement benefit expense was $29.0 million, inclusive of a $14.1 million pension remeasurement loss, in fiscal
year 2024, compared to $79.7 million in the prior year, inclusive of a $26.8 million pension remeasurement loss. Fiscal year
F-22
2023 also includes a $41.7 million pension settlement loss, as discussed above. Interest expense increased to $108.2 million in
fiscal year 2024 compared to $92.8 million in fiscal year 2023 largely due to the issuance in August 2023 of the $425 million
aggregate principal amount of 7.25% Senior Notes due 2030 (2030 Notes), partially offset by the redemption of the 2025
Convertible Notes during the third quarter of 2024. Other nonoperating income for fiscal year 2024 includes a $11.6 million
gain on the sale of certain oil and gas rights.
Our effective tax rate was 21.3%, resulting in an income tax provision of $103.4 million for the fiscal year 2024. The effective
tax rate for fiscal year 2024 includes discrete tax benefits of $6.2 million inclusive of $3.3 million for share-based
compensation. Results in fiscal year 2023 include an income tax benefit of $128.2 million, which included a $140.3 million
benefit for the reversal of valuation allowances. Net income attributable to ATI was $367.8 million, or $2.55 per share, in fiscal
year 2024, compared to $410.8 million, or $2.81 per share, for fiscal year 2023.
Adjusted EBITDA was $729.1 million, or 16.7% of sales, for fiscal year 2024, and $634.6 million, or 15.2% of sales, for fiscal
year 2023. EBITDA and Adjusted EBITDA are measures utilized by ATI that we believe are useful to investors because these
measures are commonly used to analyze companies on the basis of operating performance, leverage and liquidity. Furthermore,
analogous measures are used by industry analysts to evaluate operating performance. EBITDA and Adjusted EBITDA are non-
GAAP measures and are not intended to represent, and should not be considered more meaningful than, or as alternatives to, a
measure of operating performance as determined in accordance with U.S. generally accepted accounting principles (U.S.
GAAP). We define EBITDA as income from continuing operations before interest and income taxes, plus depreciation and
amortization, goodwill impairment charges and debt extinguishment charges. We define Adjusted EBITDA as EBITDA
excluding significant non-recurring charges or credits, restructuring and other charges/credits, gains or losses from the sale of
accounts receivables, strike related costs, long-lived asset impairments, pension remeasurement gains and losses, other
postretirement/pension curtailment and settlement gains and losses, and gains or losses on sales of businesses. EBITDA and
Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not
consider certain cash requirements such as interest payments, tax payments and capital expenditures. See the Financial
Condition and Liquidity section of Management’s Discussion and Analysis for a reconciliation of amounts reported under U.S.
GAAP to these non-GAAP measures.
F-23
Results by Business Segment
As discussed above, we operate in two business segments: HPMC and AA&S. HPMC sales increased 8% in fiscal year 2024
compared to fiscal year 2023, primarily due to higher aerospace & defense market sales. Increased demand for next generation
commercial jet engines, defense applications, and commercial airframe products resulted in a 10% increase in sales to the
aerospace & defense markets. Full fiscal year 2024 AA&S sales increased 2% due to an 11% increase in aerospace & defense
sales, a 47% increase in medical market sales and a 22% increase in electronics market sales partially offset by continued
softness in certain general industrial end markets, particularly conventional energy.
Total segment EBITDA was $782.3 million, or 17.9% of sales, in fiscal year 2024, compared to total segment EBITDA of
$710.2 million, or 17.0% of sales, in fiscal year 2023. Our measure of segment EBITDA, which we use to analyze the
performance and results of our business segments, excludes net interest expense, income taxes, depreciation and amortization,
goodwill impairment charges, debt extinguishment charges, corporate expenses, closed operations and other income (expense),
restructuring and other credits/charges, gains or losses from the sale of accounts receivables, strike related costs, long-lived
asset impairments, pension remeasurement gains and losses, other postretirement/pension curtailment and settlement gains and
losses, and gains or losses on sales of businesses. Results on our management basis of reporting were as follows:
(In millions)
Fiscal Year Ended
December 29,
December 31,
January 1,
2024
2023
2023
Sales:
High Performance Materials & Components
$
2,278.5
$
2,120.2
$
1,641.2
Advanced Alloys & Solutions
2,083.6
2,053.5
2,194.8
Total external sales
$
4,362.1
$
4,173.7
$
3,836.0
EBITDA:
High Performance Materials & Components
$
461.4
$
433.6
$
303.4
% of Sales
20.3 %
20.5 %
18.5 %
Advanced Alloys & Solutions
320.9
276.6
375.3
% of Sales
15.4 %
13.5 %
17.1 %
Total segment EBITDA
782.3
710.2
678.7
% of Sales
17.9 %
17.0 %
17.7 %
Corporate expenses
(64.0)
(62.3)
(60.3)
Closed operations and other income (expenses)
10.8
(13.3)
(5.6)
Total ATI Adjusted EBITDA
729.1
634.6
612.8
Depreciation & amortization
(151.5)
(146.1)
(142.9)
Interest expense, net
(108.2)
(92.8)
(87.4)
Restructuring and other charges
(22.1)
(31.4)
(23.7)
Retirement benefit settlement loss
—
(41.7)
—
Pension remeasurement gain (loss)
(14.1)
(26.8)
100.3
Joint venture restructuring credit
—
—
0.9
Gains (losses) on sale of businesses, net
52.9
(0.6)
(105.4)
Income before income taxes
$
486.1
$
295.2
$
354.6
As part of managing the performance of our business, we focus on controlling Managed Working Capital, which we define as
gross accounts receivable, short-term contract assets and gross inventories, less accounts payable and short-term contract
liabilities. We exclude the effects of inventory valuation reserves and reserves for uncollectible accounts receivable when
computing this non-GAAP performance measure, which is not intended to replace Working Capital or to be used as a measure
of liquidity. We employ several strategies to actively manage our Managed Working Capital, seeking to effectively balance the
need to maintain appropriate levels of Managed Working Capital to support our growth and operations, while deploying our
cash efficiently. Our strategies to actively manage our Managed Working Capital include, but are not limited to, taking
advantage of favorable customer and supplier payment terms, participating in supplier financing programs, accounts receivable
factoring arrangements and other customer financing programs, managing the timing of purchases of raw materials, and
leveling manufacturing process throughput and shipping to limit periodic increases in Managed Working Capital. We assess
F-24
Managed Working Capital performance as a percentage of the prior three months’ annualized sales to evaluate the asset
intensity of our business.
At December 29, 2024, Managed Working Capital was 30.9% of annualized total ATI sales compared to 31.1% of annualized
sales at December 31, 2023. Although overall Managed Working Capital increased year over year primarily due to increases in
inventory and accounts receivable, such increases were largely in line and due to our increased sales given our fairly consistent
Managed Working Capital as a percentage of annualized sales year over year. The $129.4 million increase in overall Managed
Working Capital in fiscal year 2024 is detailed in the table below. Days sales outstanding, which measures actual collection
timing for accounts receivable, worsened slightly by 2% as of December 29, 2024 compared to fiscal year 2023. Gross
inventory turns, which measures how many times we turn over our inventory relative to cost of sales in a year, was consistent in
fiscal year 2024 compared to fiscal year 2023. We continue efforts to focus on operational improvements to positively impact
the inventory intensity of our business and alleviate the required investment of Managed Working Capital in our growing
business.
The computations of Managed Working Capital at December 29, 2024 and December 31, 2023 reconciled to the financial
statement line items as computed under U.S. GAAP, were as follows.
(In millions)
December 29, 2024
December 31, 2023
Accounts receivable
$
709.2
$
625.0
Short-term contract assets
75.6
59.1
Inventory
1,353.0
1,247.5
Accounts payable
(609.1)
(524.8)
Short-term contract liabilities
(169.4)
(163.6)
Subtotal
1,359.3
1,243.2
Allowance for doubtful accounts
15.0
3.2
Inventory reserves
68.5
75.5
Net managed working capital held for sale
8.5
—
Managed working capital
$
1,451.3
$
1,321.9
Annualized prior 3 months sales
$
4,690.5
$
4,255.8
Managed working capital as a % of annualized sales
30.9 %
31.1 %
December 29, 2024 change in managed working capital
$
129.4
Comparative information for our overall revenues by end market, and their respective percentages of total revenues, is as
follows:
(In millions)
Fiscal Year
Market
2024
2023
Aerospace & Defense:
Jet Engines- Commercial
$
1,457.8
33 % $
1,333.5
32 %
Airframes- Commercial
772.9
18 %
739.4
18 %
Defense
490.2
11 %
401.9
9 %
Total Aerospace & Defense
2,720.9
62 %
2,474.8
59 %
Specialty Energy
284.6
7 %
273.2
7 %
Medical
224.9
5 %
176.9
4 %
Electronics
194.3
4 %
159.9
4 %
Other Core Markets
703.8
16 %
610.0
15 %
Core End Markets
3,424.7
78 %
3,084.8
74 %
Conventional Energy
302.0
7 %
414.6
10 %
Automotive
259.4
6 %
210.7
5 %
Construction/Mining
158.5
4 %
162.9
4 %
Other
217.5
5 %
300.7
7 %
Industrial Markets
$
937.4
22 % $
1,088.9
26 %
Total
$
4,362.1
100 % $
4,173.7
100 %
F-25
Comparative information for our major products, based on their percentages of revenues, is as follows. Hot-Rolling and
Processing Facility (HRPF) conversion service sales in the AA&S segment are excluded from this presentation.
Fiscal Year
2024
2023
Nickel-based alloys and specialty alloys
45 %
49 %
Precision forgings, castings and components
19 %
17 %
Titanium and titanium-based alloys
18 %
17 %
PRS products
9 %
10 %
Zirconium and related alloys
9 %
7 %
Total
100 %
100 %
Sales by geographic area and as a percentage of total sales, were as follows:
(In millions)
Fiscal Year
2024
2023
United States
$
2,525.2
58 % $
2,250.8
54 %
Europe
1,062.4
24 %
1,051.0
25 %
Asia
508.6
12 %
591.9
14 %
Canada
116.2
3 %
111.0
3 %
Other
149.7
3 %
169.0
4 %
Total sales
$
4,362.1
100 % $
4,173.7
100 %
Information with respect to our business segments follows.
High Performance Materials & Components
Fiscal Year
Fiscal Year
(In millions)
2024
% Change
2023
Sales to external customers
$
2,278.5
8 % $
2,120.2
Segment EBITDA
$
461.4
6 % $
433.6
Segment EBITDA as a percentage of sales
20.3 %
20.5 %
International sales as a percentage of sales
50.2 %
56.8 %
Our HPMC segment produces a wide range of high performance materials, including titanium and titanium-based alloys,
nickel- and cobalt-based alloys and superalloys, advanced powder alloys and other specialty materials, in long product forms
such as ingot, billet, bar, rod, wire, shapes and rectangles, and seamless tubes, plus precision forgings, components, and
machined parts.
Fiscal Year 2024 Compared to Fiscal Year 2023
Sales of $2.3 billion for the HPMC segment in fiscal year 2024 increased 8% compared to fiscal year 2023, primarily due to
strong demand in aerospace & defense markets as well as increased medical market sales, which were up 13% compared to
fiscal year 2023. Sales to the commercial aerospace market increased 8%, as airframe sales increased 5% and commercial jet
engine sales increased 9%, and sales to the defense market increased 24%. Industrial markets sales declined by 23%.
F-26
Comparative information for our HPMC segment revenues by market, the respective percentages of overall segment revenues
for the fiscal years 2024 and 2023, and the percentage change in revenues by market for fiscal year 2024 is as follows:
(In millions)
Fiscal Year
Market
2024
2023
Change
Aerospace & Defense:
Jet Engines- Commercial
$ 1,365.4
60 % $ 1,255.3
59 %
$
110.1
9 %
Airframes- Commercial
369.7
16 %
350.6
17 %
19.1
5 %
Defense
224.8
10 %
181.0
8 %
43.8
24 %
Total Aerospace & Defense
1,959.9
86 %
1,786.9
84 %
173.0
10 %
Medical
115.5
5 %
102.6
5 %
12.9
13 %
Specialty Energy
96.8
4 %
93.9
4 %
2.9
3 %
Electronics
3.0
— %
3.1
— %
(0.1)
(3) %
Other Core Markets
215.3
9 %
199.6
9 %
15.7
8 %
Core End Markets
2,175.2
95 %
1,986.5
93 %
188.7
9 %
Construction/Mining
26.3
1 %
35.0
2 %
(8.7)
(25) %
Automotive
15.2
1 %
24.6
1 %
(9.4)
(38) %
Conventional Energy
9.8
1 %
10.6
1 %
(0.8)
(8) %
Other
52.0
2 %
63.5
3 %
(11.5)
(18) %
Industrial Markets
103.3
5 %
133.7
7 %
(30.4)
(23) %
Total
$ 2,278.5
100 % $ 2,120.2
100 %
$
158.3
8 %
We utilize LTAs for our specialty materials, including powders, parts and components, with certain of our customers, including
several aerospace market OEMs, to reduce their supply uncertainty. These LTAs cover sales of ATI’s specialty materials, parts
and components used in both next-generation and legacy aircraft platforms, including jet engines. Our LTAs include a titanium
products supply agreement for aircraft airframes and structural components with Boeing. This LTA covers value-added
titanium products and provides opportunity for greater use of ATI’s next generation and advanced titanium alloys in both long
product and flat-rolled product forms. The agreement includes both long-product forms that are manufactured within the
HPMC segment, and a significant amount of plate products that are manufactured utilizing assets of both the HPMC and AA&S
segments. Revenues and profits associated with these titanium products covered by the Boeing LTA are included primarily in
the results for the HPMC segment. The HPMC segment also includes revenues and profits under our LTA with Airbus for
titanium airframe products.
We have LTAs with GE Aviation and Safran to supply premium titanium alloys, nickel-based alloys, and vacuum-melted
specialty alloys products for commercial and military jet engine applications. In addition, we have LTAs with Rolls-Royce plc
for the supply of disc-quality mill products and precision forgings for commercial jet engine applications and with Pratt &
Whitney to provide isothermal and conventional forgings for use in jet engines. We also supply products to other important
parts of the aircraft market such as helicopters and rotary engine fixed wing aircraft.
New airframe designs contain a larger percentage of titanium alloys, and the jet engines that power them use newer nickel and
titanium-based alloys for improved performance and more economical operating costs. Boeing and Airbus continue to have
multi-year backlogs of orders for both legacy models and next-generation aircraft, and there are approximately 30,000 jet
engines with firm orders (Aero Engine News, January 2025). Due to manufacturing cycle times, demand for our specialty
materials leads the deliveries of new aircrafts by approximately 6 to 12 months.
Use of these newer materials, particularly for jet engine applications, is expected to continue to increase for several years, with
strong growth expected in powder metal alloys, including increased usage of iso-thermal forging and additive manufacturing
production processes.
In addition, as our specialty materials are used in rotating components of jet engines, demand for our products for spare parts is
impacted by aircraft flight activity and engine refurbishment requirements of U.S. and foreign aviation regulatory authorities.
F-27
As the number of aircraft in service increases, the need for our materials associated with engine refurbishment is expected to
increase.
Comparative information for HPMC’s major product categories based on their percentages of the segment’s overall revenue is
as follows:
Fiscal Year
2024
2023
Nickel-based alloys and specialty alloys
41 %
44 %
Precision forgings, castings and components
36 %
33 %
Titanium and titanium-based alloys
23 %
22 %
PRS products
— %
1 %
Total
100 %
100 %
HPMC segment EBITDA for fiscal year 2024 increased 6% to $461.4 million, or 20.3% of sales, compared to $433.6 million,
or 20.5% of sales, in fiscal year 2023. Strength in the HPMC segment continues to be driven by increased volumes on higher
margin next-generation commercial aerospace platforms. Results in fiscal year 2024 included $9.0 million of benefits related to
the recognition of previously deferred employee retention tax credits, which were partially offset by a charge of approximately
$6.3 million due to a commercial negotiation with a customer and higher incentive compensation, maintenance and outsourcing
costs. Fiscal year 2023 included a $10.5 million benefit associated with an insurance claim due to an outage at one of our
facilities.
Advanced Alloys & Solutions
Fiscal Year
Fiscal Year
(In millions)
2024
% Change
2023
Sales to external customers
$
2,083.6
2 % $
2,053.5
Segment EBITDA
$
320.9
16 % $
276.6
Segment EBITDA as a percentage of sales
15.4 %
13.5 %
International sales as a percentage of sales
33.2 %
35.0 %
Fiscal Year 2024 Compared to Fiscal Year 2023
Sales of $2.1 billion for the AA&S segment in fiscal year 2024 increased 2% compared to fiscal year 2023, as an 11% increase
in aerospace & defense sales, a 47% increase in medical market sales and a 22% increase in electronics market sales were
partially offset by continued industrial markets softness, particularly conventional energy.
F-28
Comparative information for our AA&S segment revenues by market, the respective percentages of overall segment revenues,
for the fiscal years 2024 and 2023, and the percentage change in revenues by market for fiscal year 2024 is as follows:
(In millions)
Fiscal Year
Market
2024
2023
Change
Aerospace & Defense:
Jet Engines- Commercial
92.4
4 %
78.2
4 %
14.2
18 %
Airframes- Commercial
403.2
19 %
388.8
19 %
14.4
4 %
Defense
265.4
13 %
220.9
11 %
44.5
20 %
Total Aerospace & Defense
761.0
36 %
687.9
34 %
73.1
11 %
Electronics
191.3
9 %
156.8
8 %
34.5
22 %
Specialty Energy
187.8
9 %
179.3
8 %
8.5
5 %
Medical
109.4
6 %
74.3
4 %
35.1
47 %
Other Core Markets
488.5
24 %
410.4
20 %
78.1
19 %
Core End Markets
1,249.5
60 %
1,098.3
54 % $
151.2
14 %
Conventional Energy
292.2
14 %
404.0
20 %
(111.8)
(28) %
Automotive
244.2
12 %
186.1
9 %
58.1
31 %
Construction/Mining
132.2
6 %
127.9
6 %
4.3
3 %
Other
165.5
8 %
237.2
11 %
(71.7)
(30) %
Industrial Markets
$
834.1
40 % $
955.2
46 % $
(121.1)
(13) %
Total
$ 2,083.6
100 % $ 2,053.5
100 % $
30.1
2 %
Our AA&S segment produces zirconium and related alloys including hafnium and niobium, nickel-based alloys, titanium and
titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and PRS products. AA&S also provides
hot-rolling conversion services at its HRPF, including carbon steel products under several LTAs.
Comparative information for the AA&S segment’s major product categories, based on their percentages of revenue are
presented in the following table. HRPF conversion service sales are excluded from this presentation.
Fiscal Year
2024
2023
Nickel-based alloys and specialty alloys
49 %
54 %
PRS products
19 %
19 %
Zirconium and related alloys
19 %
15 %
Titanium and titanium-based alloys
13 %
12 %
Total
100 %
100 %
Segment EBITDA was $320.9 million, or 15.4% of sales, a 16% increase from segment EBITDA of $276.6 million, or 13.5%
of sales, in fiscal year 2023. The margin increase compared to the prior year was primarily due to a favorable sales mix, as
growth in titanium mill products and exotic alloys offset weaker demand for nickel-based alloys. AA&S segment EBITDA in
fiscal year 2024 and 2023 included benefits from credits of $22.7 million and $10.1 million, respectively, for the AMPC. Fiscal
year 2024 also included $7.7 million of benefits related to the recognition of previously deferred employee retention tax credits,
which were partially offset by a charge of approximately $5.5 million due to a commercial negotiation with a customer and
higher incentive compensation and maintenance costs.
F-29
Corporate Expenses
Corporate expenses, which are primarily included in selling and administrative expenses in the statement of operations, were
$64.0 million in fiscal year 2024 compared to $62.3 million in fiscal year 2023. Increased expenses in fiscal years 2024
compared to fiscal year 2023 were primarily due to higher incentive compensation costs.
Closed Operations and Other Income/Expenses
Closed operations and other income/expenses are presented primarily in selling and administrative expenses in the consolidated
statements of operations and include legal, environmental, retirement benefits and insurance obligations associated with closed
operations as well as gains from the sale of non-core assets. Closed operations and other expenses provided income of $10.8
million in fiscal year 2024, compared to expense of $13.3 million in fiscal year 2023. Fiscal year 2024 includes an $11.6
million gain on the sale of certain oil and gas rights, included within other income, net, on the consolidated statement of
operations, and favorable foreign currency transaction impacts as compared to the prior year period. Fiscal year 2024 also
includes a $2.3 million gain on the sale of assets for our idled Houston, PA facility included within gain on asset sales and sales
of businesses, net, on the consolidated statement of operations. We received $3.5 million of proceeds from this sale, which was
reported as an investing activity on the consolidated statement of cash flows. Fiscal year 2023 reflects higher insurance costs
associated with an outstanding insurance claim involving our captive insurance company.
Depreciation and Amortization
The following table shows depreciation & amortization for the relevant periods by each business segment. Depreciation
expense in fiscal year 2023 includes $3.8 million of accelerated depreciation of fixed assets related to the restructuring of our
European operations and the closure of our Robinson, PA operations.
Fiscal Year
(In millions)
2024
2023
Depreciation and amortization:
High Performance Materials & Components
$
71.6
$
71.1
Advanced Alloys & Solutions
73.2
67.9
Other
6.7
7.1
$
151.5
$
146.1
Interest Expense, Net
Interest expense, net of interest income and interest capitalization, was $108.2 million in fiscal year 2024, compared to $92.8
million in fiscal year 2023. The increase in fiscal year 2024 compared to fiscal year 2023 is largely a result of the issuance in
August 2023 of the 2030 Notes, partially offset by a decline from the redemption of the 2025 Convertible Notes during the third
quarter of 2024. Further, interest expense is presented net of interest income of $16.0 million in fiscal year 2024 and $13.0
million in fiscal year 2023. Interest expense in fiscal years 2024 and 2023 was reduced by $11.8 million and $13.5 million,
respectively, related to interest capitalization on large, strategic capital projects.
Restructuring and Other Charges/Credits
For the fiscal year ended December 29, 2024, restructuring and other charges were $22.1 million and include $11.3 million of
start-up costs, $4.6 million of charges associated with our European restructuring, $4.1 million of severance-related
restructuring charges primarily related to cost reduction actions in our domestic operation, and $2.1 million of transaction
related costs. These costs were recorded in the consolidated statement of operations based on the nature of the charge, with
$15.3 million recorded as cost of sales, $2.7 million recorded as selling and administrative expenses and $4.1 million as
restructuring charges on the consolidated statements of operations. These restructuring and other charges are excluded from
segment and adjusted EBITDA.
For the fiscal year ended December 31, 2023, restructuring and other charges were $31.4 million, which are excluded from
segment results. These charges include $7.7 million of severance-related restructuring charges and $23.7 million of charges
included within cost of sales on the consolidated statements of operations. The $7.7 million of severance-related restructuring
charges represent severance for our European restructuring and headcount reductions in ATI domestic operations. The $23.7
million of charges within cost of sales include $11.5 million of start-up costs, $1.9 million of costs associated with an
unplanned outage at our Lockport, NY facility, and $10.3 million primarily for asset write-offs for the restructuring of our
F-30
European operations and the closure of our Robinson, PA operations. These restructuring and other charges are excluded from
segment and adjusted EBITDA.
Pension Remeasurement Gains and Losses
The Company recognizes gains and losses from the remeasurement of the projected benefit obligation and plan assets for
defined benefit pension plans immediately in earnings through net periodic pension benefit cost. The Company completes the
remeasurements of these plans in the fourth quarter of each fiscal year and, as a result, we recognized pension remeasurement
losses of $14.1 million and $26.8 million in fiscal years 2024 and 2023, respectively. These losses are excluded from segment
and adjusted EBITDA and recorded in nonoperating retirement benefit income/expense on the consolidated statements of
operations.
Retirement Benefit Settlement Gains and Losses
On October 17, 2023, we completed a voluntary cash out for term vested employees and a large annuity buyout related to
approximately 8,200 U.S. qualified defined benefit pension plan participants. As a result of the annuity buyout, ATI recognized
a $41.7 million pretax settlement loss, which is excluded from segment and adjusted EBITDA and recorded in nonoperating
retirement benefit income/expense on the consolidated statement of operations.
Gains/Loss on Sale of Businesses, Net
Gain on sales of businesses for fiscal year 2024 is related to a $52.9 million gain on the sale of our precision rolled strip
operations in New Bedford, MA operations and Remscheid, Germany, for which $48.0 million of proceeds, net of transaction
costs, were received and reported as an investing activity on the consolidated statement of cash flows.
Loss on sales of businesses for fiscal year 2023 is related to a $0.6 million loss on the sale of our Northbrook, IL operations.
These gains and losses on sale of businesses are excluded from segment and adjusted EBITDA.
Income Taxes
For fiscal year 2024, our effective tax rate was 21.3% resulting in an income tax provision of $103.4 million. The effective tax
rate for fiscal year 2024 includes discrete tax benefits of $6.2 million inclusive of $3.3 million for share-based compensation.
Results in fiscal year 2023 include an income tax benefit of $128.2 million, which included a $140.3 million benefit for the
reversal of valuation allowances.
Financial Condition and Liquidity
We have an ABL credit facility, which is collateralized by the accounts receivable and inventory of our operations. The ABL
credit facility also provides us with the option of including certain machinery and equipment as additional collateral for
purposes of determining availability under the facility. The ABL credit facility, which matures in September 2027, includes a
$600 million revolving credit facility, a letter of credit sub-facility of up to $200 million, a $200 million term loan (ABL Term
Loan), and a swing loan facility of up to $60 million. The ABL Term Loan can be prepaid in increments of $25 million if
certain minimum liquidity conditions are satisfied. In addition, we have the right to request an increase of up to $300 million
under the revolving credit facility for the duration of the ABL.
As of December 29, 2024, there were no outstanding borrowings under the revolving credit portion of the ABL, and $30.5
million was utilized to support the issuance of letters of credit. There were no revolving credit borrowings under the ABL
during fiscal year 2024. There were average revolving credit borrowings of $13 million bearing an average annual interest rate
of 6.5% under the ABL during fiscal year 2023.
The ABL Term Loan has an interest rate of 2.0% above adjusted Secured Overnight Financing Rate (SOFR). The applicable
interest rate for revolving credit borrowings under the ABL credit facility includes interest rate spreads based on available
borrowing capacity that range between 1.25% and 1.75% for SOFR-based borrowings and between 0.25% and 0.75% for base
rate borrowings.
The ABL credit facility contains a financial covenant whereby we must maintain a fixed charge coverage ratio of not less than
1.00:1.00 after an event of default has occurred and is continuing or if the undrawn availability under the ABL revolving credit
portion of the facility is less than the greater of (i) 10% of the then applicable maximum loan amount under the revolving credit
portion of the ABL and the outstanding ABL Term Loan balance, or (ii) $60.0 million. We were in compliance with the fixed
charge coverage ratio as of December 29, 2024.
F-31
During the fourth quarter of 2024, we received $48.0 million in cash, net of transaction costs, for the sale of our precision rolled
strip operations in New Bedford, MA and Remscheid, Germany. We also received $11.6 million in cash for the sale of certain
oil and gas rights. Overall, we received cash for non-core assets sales of over $65 million, which are recorded in investing
activities on the consolidated statement of cash flows.
During the third quarter of 2024, we notified holders of the $291.4 million outstanding principal amount of our 2025
Convertible Notes that they would be redeemed prior to their maturity date. The holders of any outstanding 2025 Convertible
Notes had the right to convert the principal amount of such notes into shares of ATI’s common stock prior to the maturity date.
Any 2025 Convertible Notes not tendered for conversion prior to the maturity date were redeemed in cash at a redemption price
equal to the principal amount, plus accrued and unpaid interest. As a result, $291.0 million principal amount of the outstanding
notes was converted to 18.8 million shares of ATI common stock, with the remaining $0.4 million of outstanding principal
balance that was not tendered for conversion paid in cash. We also settled the capped call transactions initiated as part of the
issuance of the 2025 Convertible Notes for $76.1 million in cash, which is recorded as additional paid-in capital on the
consolidated balance sheet and as a financing activity on the consolidated statement of cash flows.
At December 29, 2024, we had $721 million of cash and cash equivalents, and available additional liquidity from the undrawn
capacity under the ABL credit facility of approximately $525 million, for total liquidity of approximately $1.3 billion. Our next
meaningful debt maturity is $150 million of debentures in the fourth quarter of fiscal year 2025, which we expect to repay with
cash on hand at that time.
In October 2023, we purchased group annuity contracts from an insurer covering approximately 85% of our U.S. qualified
defined benefit pension plan obligations. Under these contracts, we transferred the pension obligations and associated assets for
approximately 8,200 plan participants to the selected insurance company. After these actions, our U.S. qualified defined benefit
plan includes approximately 2,000 participants. Based on current actuarial assumptions, we are not required to make any
contributions to our pension plan during fiscal year 2025. Using our long-term weighted average expected rate of return on
pension plan assets and other actuarial assumptions, we do not expect to have any significant minimum cash funding
requirements to the defined benefit pension plan for at least ten years. However, these funding estimates are subject to
significant uncertainty including the actual pension trust assets’ fair value, and the discount rates used to measure pension
liabilities.
Periodically, our Board of Directors authorizes the repurchase of ATI Common stock (the “Share Repurchase Program”), the
most recent of which was $700 million that was announced in September 2024. In fiscal year 2024, ATI used $260 million to
repurchase 5.3 million shares of its common stock under the Share Repurchase Program. As of December 29, 2024, there is
$590 million of authorization remaining under the Share Repurchase Program. Repurchases under these programs can be made
in the open market or in privately negotiated transactions, with the amount and timing of repurchases depending on market
conditions and corporate needs. Open market repurchases are structured to occur within the pricing and volume requirements
of SEC Rule 10b-18. The current Share Repurchase Program has no time limit, does not obligate the Company to repurchase
any specific number of shares, and may be modified, suspended, or terminated at any time by the Board of Directors without
prior notice.
In managing our overall capital structure, we focus on the ratio of net debt to Adjusted EBITDA, which we use as a measure of
our ability to repay our incurred debt. We define net debt as the total principal balance of our outstanding indebtedness
excluding deferred financing costs, net of cash, at the balance sheet date. See the explanations above for our definitions of
Adjusted EBITDA and EBITDA, which are non-GAAP measures and are not intended to represent, and should not be
considered more meaningful than, or as alternatives to, a measure of operating performance as determined in accordance with
U.S. GAAP. Our ratio of net debt to Adjusted EBITDA (Adjusted EBITDA Leverage Ratio) measures net debt at the balance
sheet date to Adjusted EBITDA as calculated on the trailing twelve-month period from this balance sheet date.
F-32
Our Debt to Adjusted EBITDA Leverage Ratio and Net Debt to Adjusted EBITDA Leverage ratio improved in fiscal year 2024
compared to fiscal year 2023, resulting from higher earnings and lower debt as a result of the redemption of the 2025
Convertible Notes. The reconciliations of our Adjusted EBITDA Leverage Ratios to the balance sheet and income statement
amounts as reported under U.S. GAAP are as follows:
December 29,
2024
December 31,
2023
Net income attributable to ATI
$
367.8 $
410.8
Net income attributable to noncontrolling interests
14.9
12.6
Net income
382.7
423.4
Interest expense
108.2
92.8
Depreciation and amortization
151.5
146.1
Income tax provision (benefit)
103.4
(128.2)
Pension remeasurement loss
14.1
26.8
Retirement benefit settlement loss
—
41.7
Restructuring and other charges
22.1
31.4
Loss (gain) on asset sales and sale of business
(52.9)
0.6
Adjusted EBITDA
$
729.1 $
634.6
Debt
$
1,895.3 $
2,179.6
Add: Debt issuance costs
14.2
19.6
Total debt
1,909.5
2,199.2
Less: Cash
(721.2)
(743.9)
Net debt
$
1,188.3 $
1,455.3
Debt to Adjusted EBITDA
2.62
3.47
Net Debt to Adjusted EBITDA
1.63
2.29
We believe that internally generated funds, current cash on hand and available borrowings under the ABL credit facility will be
adequate to meet our liquidity needs, including the scheduled debt maturity in the fourth quarter of fiscal year 2025. We
regularly review our capital structure, various financing alternatives and conditions in the debt and equity markets in order to
opportunistically enhance our capital structure and reduce financing costs. As a result, we may seek to refinance or retire
existing indebtedness, incur new or additional indebtedness or issue equity or equity-linked securities, in each case, depending
on market and other conditions. Further, in the event we seek additional or new financing, the cost, terms and conditions of
such borrowings would be impacted by our credit rating. As of December 29, 2024, we have no off-balance sheet arrangements
as defined in Item 303(a)(4) of SEC Regulation S-K.
Cash Flow
Cash provided by operations was $407.2 million for fiscal year 2024 and $85.9 million fiscal year 2023, which included $272
million in contributions to the U.S. defined benefit pension plans. Both periods reflect higher accounts receivable and higher
inventory balances due to increased operating levels, but these conditions impacted 2024 to a much lesser extent than 2023.
Working capital balances, and consequently cash from operations, can fluctuate throughout any operating period based upon the
timing of receipts from customers and payments to vendors. However, we actively manage our working capital to allow for the
required flexibility to meet our strategic objectives. Other significant fiscal year 2024 operating cash flow items included
payment of 2023 annual incentive compensation. Other significant fiscal year 2023 operating cash flow items included
payment of 2022 annual incentive compensation.
Cash used in investing activities was $159.6 million in fiscal year 2024, reflecting $239.1 million in capital expenditures to
grow our capacity and capabilities with a focus on core markets, including aerospace & defense. These investing activity
outflows were partially offset by $48.0 million of proceeds from the sale of our New Bedford, MA operations and Remscheid,
Germany operations and $27.6 million of proceeds from property, plant and equipment sales, which included $11.6 million of
proceeds on the sale of certain oil and gas rights and $3.5 million of proceeds received for the sale of assets for our idled
Houston, PA facility. We expect to fund our capital expenditures with cash on hand, cash flow generated from our operations
and, if needed, by using a portion of the ABL credit facility. Cash used in investing activities was $193.2 million in fiscal year
2023, reflecting $200.7 million in capital expenditures primarily related to AA&S transformation projects and various HPMC
growth projects.
F-33
Cash used by financing activities in fiscal year 2024 was $260.4 million, which included $260.0 million to repurchase 5.3
million shares of ATI stock under our Share Repurchase Program and $16.0 million in dividend payments to the 40%
noncontrolling interest in our PRS joint venture in China, partially offset by $76.1 million in cash received from the settlement
of the capped call as a result of the redemption of the 2025 Convertible Notes. Cash provided by financing activities in fiscal
year 2023 was $267.2 million, and included $418.8 million of net proceeds from the issuance of the 2030 Notes during the third
quarter of fiscal year 2023, partially offset by $85.2 million toward the repurchase of 2.0 million shares of ATI stock under our
repurchase programs authorized by our Board of Directors and $16.0 million in dividend payments to the 40% noncontrolling
interest in our PRS joint venture in China.
At December 29, 2024, cash and cash equivalents on hand totaled $721.2 million, a $22.7 million increase from fiscal year-end
2023. Cash and cash equivalents held by our foreign subsidiaries was $210.8 million at December 29, 2024, of which $100.9
million was held by our PRS joint venture in China.
Contractual Obligations
A summary of required payments under financial instruments (excluding accrued interest) and other commitments are presented
below.
(In millions)
Total
Less than 1
year
1-3
years
4-5
years
After 5
years
Contractual Cash Obligations
Total Debt including Finance Leases (A)
$
1,909.5 $
180.5 $
550.4 $
325.0 $
853.6
Interest on Debt (B)
499.6
109.3
194.4
129.2
66.7
Operating Lease Obligations (C)
83.7
17.4
28.4
19.3
18.6
Other Long-term Liabilities
90.4
—
41.6
16.5
32.3
Pension and OPEB Obligations (D)
217.6
30.1
53.5
46.7
87.3
Unconditional Purchase Obligations
Raw Materials (E)
1,052.2
531.1
521.1
—
—
Capital expenditures
32.0
32.0
—
—
—
Other (F)
163.2
94.9
31.5
25.7
11.1
Total
$
4,048.2 $
995.3 $
1,420.9 $
562.4 $
1,069.6
Other Financial Commitments
Lines of Credit (G)
$
670.4 $
70.4 $
600.0 $
— $
—
Guarantees
$
16.8
(A)
Amounts exclude $95 million for certain finance lease contracts the Company has agreed to enter into. See Note 11,
Leases for further information.
(B)
Amounts include contractual interest payments using the interest rates in effect as of December 29, 2024 applicable
to the Company’s ABL Term Loan due 2027, the Allegheny Ludlum 6.95% Debentures due 2025, the 2027 Notes,
the 2029 Notes, the 2030 Notes and the 2031 Notes.
(C)
Amounts include operating lease obligations at their undiscounted value. These obligations are presented in other
current liabilities and other long-term liabilities on the consolidated balance sheets at their discounted value, using
applicable interest rates. See Note 11, Leases for further information.
(D)
Based on current actuarial studies, amounts include payments for the next 10 years, which are not significant, to
defined benefit pension plans, assuming the expected long-term returns on pension assets are achieved. Projections
of minimum required payments to the U.S. qualified defined benefit pension plan are subject to significant
uncertainty based on a number of factors including actual pension plan asset returns, changes in estimates of
participant longevity, and changes in interest rates. Amounts also include actuarial projections of payments under
other post-employment benefit plans for the next 10 years. In most retiree healthcare plans, our contributions are
capped based on the cost as of a certain date. See Note 14, Retirement Benefits for further information.
(E)
We have contracted for physical delivery for certain of our raw materials to meet a portion of our needs. These
contracts are based upon fixed or variable price provisions. We used current market prices as of December 29,
2024, for raw material obligations with variable pricing.
(F)
We have various contractual obligations that extend through fiscal year 2030 for services involving production
facilities, information technology services and administrative operations. Our purchase obligation as disclosed
represents the estimated termination fees payable if we were to exit these contracts.
F-34
(G)
At December 29, 2024, drawn amounts on the U.S. facility were $30.5 million utilized for standby letters of credit
under the $600 million ABL credit facility, which renew annually. These standby letters of credit are used to
support: $20.8 million in workers’ compensation and general insurance arrangements, $5.4 million related to
environmental matters and $4.3 million for performance assurances.
Commitments and Contingencies
At December 29, 2024, our reserves for environmental remediation obligations totaled approximately $15 million, of which $6
million was included in other current liabilities. These reserves included estimated probable future costs of: $3 million for
federal Superfund and comparable state-managed sites; $6 million for formerly owned or operated sites for remediation or
indemnification obligations; $5 million for owned or controlled sites at which our operations have been or plan to be
discontinued; and $1 million for sites utilized by the Company in its ongoing operations. We continue to evaluate whether we
may be able to recover a portion of future costs for environmental liabilities from third parties and to pursue such recoveries
where appropriate. The timing of expenditures depends on a number of factors that vary by site. ATI expects that it will
expend present accruals over many years and that remediation of all sites with which it has been identified will be completed
within thirty years.
Asset retirement obligations (AROs) recording by the Company were $8 million at December 29, 2024. These AROs related to
landfill closures, decommissioning costs, facility leases and conditional AROs associated with manufacturing activities using
what may be characterized as potentially hazardous materials. During fiscal year 2024, we de-recognized $10 million of AROs
in connection with the sale of our precision rolled strip operations.
Based on currently available information, it is reasonably possible that the costs for active matters may exceed our recorded
reserves by as much as $16 million. However, future investigation or remediation activities may result in the discovery of
additional hazardous materials, potentially higher levels of contamination than discovered during prior investigation, and may
impact costs of the success or lack thereof in remedial solutions. Therefore, future developments, administrative actions or
liabilities relating to environmental matters could have a material adverse effect on the ATI’s consolidated financial condition
or results of operations.
Retirement Benefits
All of ATI’s defined benefit pension plans are closed to new entrants, and at most ATI operations with pension participants, the
plans are frozen for all future benefit accruals, with less than 800 participants still accruing benefit service. Additionally, all of
the remaining collectively-bargained defined benefit retiree health care plans at ATI’s operations are now closed to new
entrants, with cost caps in place for these obligations. As a result of these actions, ATI’s retirement savings and other
postretirement benefit programs have largely transitioned to a defined contribution structure. From fiscal years 2013 to 2022,
five annuity buyouts of retired participants and two voluntary cash out programs of deferred participants during this period
helped to reduce the total participants in ATI’s U.S. qualified defined benefit pension plans by more than 60%. During the
fourth quarter of fiscal year 2023, we purchased group annuity contracts from an insurer covering approximately 85% of our
U.S. qualified defined benefit pension plan obligations. Under these contracts, we transferred the pension obligations and
associated assets for approximately 8,200 plan participants to the selected insurance company. To facilitate this pension
derisking strategy, we completed a voluntary cash out for term vested employees and contributed $222 million to our pension
plan in the third quarter of fiscal year 2023, to fully fund remaining pension liabilities ahead of this annuity transaction. After
these actions, our U.S. qualified defined benefit pension plan includes approximately 2,000 participants.
At December 29, 2024, our defined benefit pension plans were approximately 92% funded in accordance with generally
accepted accounting principles, and were remeasured at that date using a 5.85% discount rate to measure the projected benefit
obligation. For ERISA funding purposes, discount rates used to measure pension liabilities for U.S. qualified defined benefit
plans are calculated on a different basis using an IRS-determined segmented yield curve. Funding requirements are also
affected by IRS-determined mortality assumptions, which may differ from those used under accounting standards. Based on
current actuarial assumptions, we are not required to make any contributions to our pension plan during fiscal year 2025, and
will not be required to make significant contributions for at least ten years. However, these estimates are subject to significant
uncertainty, including the performance of our pension trust assets and the discount rates used to measure pension liabilities.
Pension trust asset performance for both our accounting and ERISA funding calculations is determined using the market value
of plan assets at the end of each year.
Critical Accounting Policies
The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting
principles. When more than one accounting principle, or the method of its application, is generally accepted, management
selects the principle or method that is most appropriate in our specific circumstances. Application of these accounting
principles requires our management to make estimates about the future resolution of existing uncertainties; as a result, actual
F-35
results could differ from these estimates. In preparing these consolidated financial statements, management has made its best
estimates and judgments of the amounts and disclosures included in the financial statements giving due regard to materiality.
Asset Impairment
We monitor the recoverability of the carrying value of our long-lived assets. An impairment charge is recognized when the
expected net undiscounted future cash flows from an asset’s use (including any proceeds from disposition) are less than the
asset’s carrying value, and the asset’s carrying value exceeds its fair value. Changes in the expected use of a long-lived asset
group, and the financial performance of the long-lived asset group and its operating segment, are evaluated as indicators of
possible impairment. Future cash flow value may include appraisals for property, plant and equipment, land and improvements,
future cash flow estimates from operating the long-lived assets, and other operating considerations.
As of April 3, 2022, our Sheffield, U.K. operations were classified as held for sale, and the terms of sale resulted in indicators
of impairment in the long-lived assets of this disposal group. A $22.3 million long-lived asset impairment charge was recorded
in the first quarter of fiscal year 2022, reported as part of the $112.2 million loss on sale of this business for the fiscal year
ended January 1, 2023. This long-lived asset impairment charge was determined using the held for sale framework and
represents Level 1 information in the fair value hierarchy.
Goodwill is reviewed annually in the fourth quarter of each fiscal year for impairment or more frequently if impairment
indicators arise. Other events and changes in circumstances may also require goodwill to be tested for impairment between
annual measurement dates. At December 29, 2024, the Company had $227.2 million of goodwill on its consolidated balance
sheet, all of which relates to the HPMC segment.
For our annual goodwill impairment evaluation performed in the fourth quarter of fiscal year 2024, quantitative goodwill
assessments were performed for the two HPMC reporting units with goodwill. Fair values were determined by using a
quantitative assessment that includes discounted cash flow and multiples of cash earnings valuation techniques, plus valuation
comparisons to recent public sale transactions of similar businesses, if any, which represents Level 3 unobservable information
in the fair value hierarchy. These impairment assessments and valuation methods require us to make estimates and assumptions
regarding revenue growth, changes in working capital and capital expenditures, selling prices and profitability that drive cash
flows, and the WACC. Many of these assumptions are determined by reference to market participants we have identified. For
example, our WACC used in our discounted cash flow assessments was 11.0% and long-term growth rates ranged from 3% to
3.5%. The estimated effect of a 0.50% change in the WACC would result in a 7% change in the fair value of the Forged
Products reporting unit. Although we believe that the estimates and assumptions used were reasonable, actual results could
differ from those estimates and assumptions.
The $227.2 million of goodwill remaining as of December 29, 2024 on our consolidated balance sheet is comprised of $161.2
million at the Forged Products reporting unit and $66.0 million at the Specialty Materials reporting unit. For our annual
goodwill impairment evaluation performed in the fourth quarter of fiscal year 2024, the Specialty Materials reporting unit had a
fair value that was significantly in excess of carrying value. The Forged Products reporting unit had a fair value that exceeded
carrying value by approximately 95% for the fiscal year 2024 annual assessment, which increased compared to the annual
evaluation for fiscal year 2023. As a result, no impairments were determined to exist from the annual goodwill impairment
evaluation for the fiscal years ended December 29, 2024, December 31, 2023 or January 1, 2023. In order to validate the
reasonableness of the estimated fair values of the reporting units as of the valuation date, a reconciliation of the aggregate fair
values of all reporting units to market capitalization was performed using a reasonable control premium. In addition, no
indicators of impairment were observed in fiscal years 2024 or 2023 associated with any of our long-lived assets.
Income Taxes
The provision for income taxes includes deferred taxes resulting from temporary differences in income for financial and tax
purposes using the liability method. Such temporary differences result primarily from differences in the carrying value of
assets and liabilities. Future realization of deferred income tax assets requires sufficient taxable income within the carryback
and/or carryforward period available under tax law. On a quarterly basis, we evaluate the realizability of our deferred tax
assets.
The evaluation includes the consideration of all available evidence, both positive and negative, regarding the estimated future
reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary
differences and carryforwards, historical taxable income in prior carryback periods if carryback is permitted, and potential tax
planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. In
situations where a three-year cumulative loss condition exists, accounting standards limit the ability to consider projections of
future results as positive evidence to assess the realizability of deferred tax assets. Valuation allowances are established when it
is estimated that it is more likely than not that the tax benefit of the deferred tax asset will not be realized.
F-36
At the end of fiscal year 2023, ATI’s U.S. operations exited a three-year cumulative loss position, which previously limited the
ability to utilize future projections as verifiable sources of income when analyzing the need for a valuation allowance. As part
of the exit, we concluded it was appropriate to consider future projections as a source of income when analyzing the need for a
valuation allowance. With the utilization of projections, we determined that valuation allowances on net deferred tax asset
balances for federal and certain state jurisdictions are no longer required. Certain individual tax attributes still require a
valuation allowance based on expected utilization. We updated our projections at the end of fiscal year 2024 and determined a
deferred tax asset valuation allowance of $57.7 million was still needed. In addition, we have $23.3 million of valuation
allowances on amounts recorded in other comprehensive loss on the consolidated balance sheet as of December 29, 2024.
Results for fiscal years 2023 and 2022 include impacts from income taxes that differ from applicable standard tax rates,
primarily related to income tax valuation allowances on the current year income along with the release of the valuation
allowance in fiscal year 2023.
Retirement Benefits
We have defined contribution retirement plans or benefit pension plans covering substantially all of our employees. We also
sponsor several postretirement plans covering certain hourly and salaried employees and retirees. These plans provide health
care and life insurance benefits for eligible employees. Company contributions to defined contribution retirement plans are
generally based on a percentage of eligible pay or based on hours worked, and are funded with cash. All of ATI’s defined
benefit pension plans are closed to new entrants, and at most ATI operations with pension participants the plans are frozen for
all future benefit accruals, with less than 800 participants still accruing benefit service. Additionally, all of the remaining,
collectively bargained defined benefit retiree health care plans at ATI’s operations are closed to new entrants, with cost caps in
place for these obligations. As a result of these actions, ATI’s retirement savings and other postretirement benefit programs
have largely transitioned to a defined contribution structure.
Under U.S. generally accepted accounting principles, amounts recognized in financial statements for defined benefit pension
plans are determined on an actuarial basis, rather than as contributions are made to the plan. A significant element in
determining our pension income or expense in accordance with the accounting standards is the expected investment return on
plan assets. In establishing the expected return on plan investments, which is reviewed annually in the fourth quarter, we take
into consideration input from our third-party pension plan asset managers and actuaries regarding the types of securities the
plan assets are invested in, how those investments have performed historically, and expectations for how those investments will
perform in the future. Our weighted average expected long-term return on pension plan investments was 5.80% in fiscal year
2024. The expected long-term rate of return on pension plan investments for fiscal year 2025 will be 5.80%. We apply the
assumed rate of return to the market value of plan assets at the end of the previous year. This produces the expected return on
plan assets that is included in annual pension expense for the current year. The actual returns on pension plan assets for the last
five fiscal years have been (2.7)% for 2024, 2.0% for 2023, (14.5)% for 2022, 12.4% for 2021, and 15.2% for 2020. The effect
of increasing, or lowering, the expected return on pension plan investments by 0.25% would result in additional pre-tax annual
income, or expense, of approximately $1 million. The cumulative difference between the expected return and the actual return
on plan assets is immediately recognized in earnings through net periodic pension benefit cost within nonoperating retirement
benefit expense on the consolidated statements of operations when pension plans are remeasured annually in the fourth quarter
or on an interim basis as triggering events require remeasurement. The amount of expected return on plan assets can vary
significantly from year-to-year since the calculation is dependent on the market value of plan assets as of the end of the
preceding year. U.S. generally accepted accounting principles allow companies to calculate the expected return on pension
assets using either an average of fair market values of pension assets over a period not to exceed five years, which reduces the
volatility in reported pension income or expense, or their fair market value at the end of the previous year. However, the U.S.
Securities and Exchange Commission currently does not permit companies to change from the fair market value at the end of
the previous year methodology, which is the methodology that we use, to an averaging of fair market values of plan assets
methodology. As a result, our results of operations and those of other companies, including companies with which we compete,
may not be comparable due to these different methodologies in calculating the expected return on pension investments.
In accordance with accounting standards, we determine the discount rate used to value pension plan liabilities as of the last day
of our fiscal year. The discount rate reflects the current rate at which the pension liabilities could be effectively settled. In
estimating this rate, we receive input from our actuaries regarding the rates of return on high quality, fixed-income investments
with maturities matched to the expected future retirement benefit payments. Based on this assessment, we established a
discount rate of 5.85% for valuing the pension liabilities as of December 29, 2024, and for determining the pension expense for
fiscal year 2025. We had assumed a discount rate of 5.60% at the end of fiscal year 2023, and initially assumed a discount rate
of 5.55% at the end of fiscal year 2022, which changed to 6.40% upon the remeasurement as of October 17, 2023, following the
large annuity buyout of retirees. The estimated effect of changing the discount rate by 0.50% would decrease pension liabilities
in the case of an increase in the discount rate or increase pension liabilities in the case of a decrease in the discount rate, by
approximately $20 million. Such a change in the discount rate would have an insignificant impact to pension expense. The
effect on pension liabilities for changes to the discount rate, as well as the net effect of other changes in actuarial assumptions
F-37
and experience, are immediately recognized in earnings through net periodic pension benefit cost within nonoperating
retirement benefit expense on the consolidated statements of operations when pension plans are remeasured annually in the
fourth quarter or on an interim basis as triggering events require remeasurement. This immediate recognition is in accordance
with the accounting standards and is the Company’s accounting policy as discussed in Note 1 to the Consolidated Financial
Statements.
With respect to our postretirement plans, under most of the plans, our contributions towards retiree medical premiums are
capped based upon the cost as of certain dates, thereby creating a defined contribution. In accordance with U.S. generally
accepted accounting standards, postretirement expenses recognized in financial statements associated with defined benefit plans
are determined on an actuarial basis, rather than as benefits are paid. We use actuarial assumptions, including the discount rate
and the expected trend in health care costs, to estimate the costs and benefit obligations for these plans. The discount rate,
which is determined annually at the end of each fiscal year, is developed based upon rates of return on high quality, fixed-
income investments. At the end of fiscal year 2024, we determined the rate to be 5.60%, compared to a 5.40% discount rate in
fiscal year 2023, and a 5.45% discount rate in fiscal year 2022. The estimated effect of changing the discount rate by 0.50%
would decrease postretirement obligations in the case of an increase in the discount rate or increase postretirement obligations
in the case of a decrease in the discount rate, by approximately $6 million. Such a change in the discount rate would have an
insignificant impact to postretirement benefit expense. Based upon predictions of continued significant medical cost inflation in
future years, the annual assumed rate of increase in the per capita cost of covered benefits of health care plans is 6.6% in 2025
and is assumed to gradually decrease to 4.0% in the year 2048 and remain level thereafter. Assumed health care cost trend rates
can have a significant effect on the benefit obligation for health care plans, however, the Company’s contributions for most of
its retiree health plans are capped based on a fixed premium amount, which limits the impact of future health care cost
increases.
Forward-Looking Statements
From time-to-time, the Company has made and may continue to make “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Certain statements in this report relate to future events and expectations and,
as such, constitute forward-looking statements. Forward-looking statements include those containing such words as
“anticipates,” “believes,” “estimates,” “expects,” “would,” “should,” “will,” “will likely result,” “forecast,” “outlook,”
“projects,” and similar expressions. Such forward-looking statements are based on management’s current expectations and
include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control,
that may cause our actual results or performance to materially differ from any future results or performance expressed or
implied by such statements. Various of these factors are described in Item 1A, Risk Factors, of this Annual Report on Form 10-
K and will be described from time-to-time in the Company filings with the SEC, including the Company’s Annual Reports on
Form 10-K and the Company’s subsequent reports filed with the SEC on Form 10-Q and Form 8-K, which are available on the
SEC’s website at www.sec.gov and on the Company’s website at www.atimetals.com. We assume no duty to update our
forward-looking statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
As part of our risk management strategy, we utilize derivative financial instruments, from time to time, to hedge our exposure
to changes in energy and raw material prices, foreign currencies, and interest rates. We monitor the third-party financial
institutions that are our counterparty to these financial instruments on a daily basis and diversify our transactions among
counterparties to minimize exposure to any one of these entities. Fair values for derivatives were measured using exchange-
traded prices for the hedged items including consideration of counterparty risk and ATI’s credit risk. Our exposure to volatility
in interest rates is presently not material, as nearly all of our debt is at fixed interest rates.
Volatility of Interest Rates. We may enter into derivative interest rate contracts to maintain a reasonable balance between
fixed- and floating-rate debt. ATI previously maintained a $50 million floating-for-fixed interest rate swap which converted a
portion of the ABL Term Loan to a 4.21% fixed rate that matured during the quarter ended June 30, 2024. There are no
outstanding derivative interest rate contracts at December 29, 2024.
Volatility of Energy Prices. Energy resources markets are subject to conditions that create uncertainty in the prices and
availability of energy resources. The prices for and availability of electricity, natural gas, oil and other energy resources are
subject to volatile market conditions. These market conditions often are affected by political and economic factors beyond our
control. Increases in energy costs, or changes in costs relative to energy costs paid by competitors, have and may continue to
adversely affect our profitability. To the extent that these uncertainties cause suppliers and customers to be more cost sensitive,
increased energy prices may have an adverse effect on our results of operations and financial condition. We use approximately
6 to 8 million MMBtu’s of natural gas annually, depending upon business conditions, in the manufacture of our products.
These purchases of natural gas expose us to risk of higher gas prices. For example, a hypothetical $1.00 per MMBtu increase in
the price of natural gas would result in increased annual energy costs of approximately $6 to $8 million. We use several
F-38
approaches to minimize any material adverse effect on our financial condition or results of operations from volatile energy
prices. These approaches include incorporating an energy surcharge on many of our products and using financial derivatives or
physical hedges to reduce exposure to energy price volatility.
At December 29, 2024, the outstanding financial derivatives used to hedge our exposure to energy cost volatility included
natural gas hedges. At December 29, 2024, we hedged approximately 75% of our annual forecasted domestic requirements for
natural gas for fiscal year 2025 and approximately 35% for fiscal year 2026. At December 29, 2024, the net mark-to-market
valuation of the outstanding natural gas hedges was an unrealized pre-tax loss of $0.1 million, comprised of $0.8 million in
prepaid expenses and other current assets, $0.9 million in other long-term assets, $1.7 million in other current liabilities and
$0.1 million in other long-term liabilities on the balance sheet. For the year ended December 29, 2024, the effects of natural
gas hedging activity increased cost of sales by $8.0 million.
Volatility of Raw Material Prices. We use raw materials surcharge and index mechanisms to offset the impact of increased raw
material costs; however, competitive factors in the marketplace can limit our ability to institute such mechanisms, and there can
be a delay between the increase in the price of raw materials and the realization of the benefit of such mechanisms. For
example, in fiscal year 2024 we used approximately 70 million pounds of nickel; therefore a hypothetical change of $1.00 per
pound in nickel prices would result in increased costs of approximately $70 million. While we enter into raw materials futures
contracts from time-to-time to hedge exposure to price fluctuations, such as for nickel, we cannot be certain that our hedge
position adequately reduces exposure. We believe that we have adequate controls to monitor these contracts, but we may not be
able to accurately assess exposure to price volatility in the markets for critical raw materials.
The majority of our products are sold utilizing raw material surcharges and index mechanisms. However, as of December 29,
2024, we had entered into financial hedging arrangements, primarily at the request of our customers, related to firm orders, for
an aggregate amount of approximately 4 million pounds of nickel with hedge dates through fiscal year 2027. The aggregate
notional amount hedged is approximately 5% of a single year’s estimated nickel raw material purchase requirements. These
derivative instruments are used to hedge the variability of a selling price that is based on the London Metals Exchange (LME)
index for nickel, as well as to hedge the variability of the purchase cost of nickel based on this LME index. Any gain or loss
associated with these hedging arrangements is included in sales or cost of sales, depending on whether the underlying risk being
hedged was the variable selling price or the variable raw material cost, respectively. At December 29, 2024, the net mark-to-
market valuation of our outstanding raw material hedges was an unrealized pre-tax loss of $4.2 million, comprised of $4.2
million in other current liabilities on the balance sheet.
Foreign Currency Risk. Foreign currency exchange contracts are used, from time-to-time, to limit transactional exposure to
changes in currency exchange rates. We sometimes purchase foreign currency forward contracts that permit us to sell specified
amounts of foreign currencies expected to be received from our export sales for pre-established U.S. dollar amounts at specified
dates. In addition, we may also hedge forecasted capital expenditures and designate cash balances held in foreign currencies as
hedges of forecasted foreign currency transactions. At December 29, 2024, we had no significant outstanding foreign currency
forward contracts.
We may also use derivative instruments that are not designated as hedges to protect our results from certain fluctuations in
foreign exchange rates, as well as to offset a portion of the foreign currency gains and losses generated by the remeasurement of
certain assets and liabilities denominated in non-functional currencies. Changes in the fair value of these foreign exchange
contract derivatives not designated as hedging instruments are recorded in cost of sales or selling, general and administrative
expenses on the consolidated statement of operations, and we recognized $2.2 million of expense, net, for settled foreign
currency forward contracts that were not designated as hedges during the fiscal year ended December 29, 2024, which offset
foreign currency gains/losses in the relevant currency. We have no significant outstanding hedges that are not designated as of
December 29, 2024.
F-39
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of ATI Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ATI Inc. and subsidiaries (the Company) as of December 29,
2024 and December 31, 2023, the related consolidated statements of operations, comprehensive income, cash flows and
statements of changes in consolidated equity for each of the three years in the period ended December 29, 2024, and the related
notes (collectively referred to as the “consolidated financial statements”.) In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company at December 29, 2024 and December 31, 2023, and
the results of its operations and its cash flows for each of the three years in the period ended December 29, 2024, in conformity
with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 29, 2024, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 21, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
F-40
Goodwill impairment assessment - Forged Products reporting unit
Description of
the Matter
At December 29, 2024, the Company had $227.2 million of goodwill on its consolidated balance sheet. As
discussed in Note 1 to the consolidated financial statements, goodwill is reviewed annually for impairment,
or more frequently if impairment indicators arise. The assessment of goodwill for impairment requires a
comparison of the fair value of each reporting unit that has goodwill associated with its operations to its
carrying amount, including goodwill. If the Company’s carrying amount of a reporting unit exceeds its fair
value, an impairment loss would be measured as the excess of the carrying value over the calculated fair
value.
Auditing the Company’s annual goodwill impairment test for the Forged Products reporting unit was
complex because the estimation of fair value using the discounted cash flow model involves subjective
management assumptions, specifically the weighted-average cost of capital. Changes in this assumption
can have a material effect on the determination of fair value.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over
the Company’s goodwill impairment evaluation process, including controls over management’s review of
the assumption described above.
Our audit procedures to test management’s impairment evaluation of the Forged Products reporting unit
included, among others, assessing the valuation methodology, the assumption discussed above, and the
underlying data used to develop the assumption. Where appropriate, we evaluated whether changes to the
market inputs and other factors would affect the assumption. We also assessed the historical accuracy of
management’s estimates and performed independent sensitivity analyses. We involved our valuation
specialists to assist us in evaluating the methodology and auditing the assumption used to calculate the
estimated fair value of the Forged Products reporting unit.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1996.
Pittsburgh, Pennsylvania
February 21, 2025
F-41
ATI Inc. and Subsidiaries
Consolidated Statements of Operations
(In millions, except per share amounts)
Fiscal Year Ended
December 29, 2024
December 31, 2023
January 1, 2023
Sales
$
4,362.1 $
4,173.7 $
3,836.0
Cost of sales
3,463.9
3,371.1
3,121.8
Gross profit
898.2
802.6
714.2
Selling and administrative expenses
342.3
328.1
297.5
Restructuring charges (credits)
4.1
7.7
(4.8)
Loss (gain) on asset sales and sales of businesses, net
(57.1)
0.4
105.4
Operating income
608.9
466.4
316.1
Nonoperating retirement benefit income (expense)
(29.0)
(79.7)
138.4
Interest expense, net
(108.2)
(92.8)
(87.4)
Other income (loss), net
14.4
1.3
(12.5)
Income before income taxes
486.1
295.2
354.6
Income tax provision (benefit)
103.4
(128.2)
15.5
Net income
382.7
423.4
339.1
Less: Net income attributable to noncontrolling interests
14.9
12.6
15.6
Net income attributable to ATI
$
367.8 $
410.8 $
323.5
Basic net income attributable to ATI per common share
$
2.82 $
3.21 $
2.54
Diluted net income attributable to ATI per common share
$
2.55 $
2.81 $
2.23
The accompanying notes are an integral part of these statements.
F-42
ATI Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(In millions)
Fiscal Year Ended
December 29, 2024
December 31, 2023
January 1, 2023
Net income
$
382.7 $
423.4 $
339.1
Currency translation adjustment
Unrealized net change arising during the period
(13.0)
1.3
(43.5)
Reclassification adjustment included in net income
—
—
20.0
Total
(13.0)
1.3
(23.5)
Derivatives
Net derivatives gain (loss) on hedge transactions
(5.9)
(28.5)
53.8
Reclassification to net income of net realized loss (gain)
11.0
2.5
(42.8)
Income taxes on derivative transactions
2.0
(6.1)
—
Total
3.1
(19.9)
11.0
Postretirement benefit plans
Actuarial gain/loss
Amortization of net actuarial loss
5.2
6.0
13.2
Net gain (loss) arising during the period
(2.2)
(3.8)
54.7
Prior service cost
Amortization to net income of net prior service credits
(0.5)
(0.6)
(0.5)
Settlement loss included in net income
—
1.1
0.7
Income taxes on postretirement benefit plans
0.5
0.3
—
Total
2.0
2.4
68.1
Other comprehensive income (loss), net of tax
(7.9)
(16.2)
55.6
Comprehensive income
374.8
407.2
394.7
Less: Comprehensive income (loss) attributable to noncontrolling
interests
13.3
12.2
(2.7)
Comprehensive income attributable to ATI
$
361.5 $
395.0 $
397.4
The accompanying notes are an integral part of these statements.
F-43
ATI Inc. and Subsidiaries
Consolidated Balance Sheets
(In millions, except share and per share amounts)
December 29, 2024
December 31, 2023
Assets
Cash and cash equivalents
$
721.2 $
743.9
Accounts receivable, net
709.2
625.0
Short-term contract assets
75.6
59.1
Inventories, net
1,353.0
1,247.5
Prepaid expenses and other current assets
86.0
62.2
Total Current Assets
2,945.0
2,737.7
Property, plant and equipment, net
1,776.9
1,665.9
Goodwill
227.2
227.2
Other assets
281.5
354.3
Total Assets
$
5,230.6 $
4,985.1
Liabilities and Stockholders’ Equity
Accounts payable
$
609.1 $
524.8
Short-term contract liabilities
169.4
163.6
Short-term debt and current portion of long-term debt
180.4
31.9
Other current liabilities
249.6
256.8
Total Current Liabilities
1,208.5
977.1
Long-term debt
1,714.9
2,147.7
Accrued postretirement benefits
164.3
175.2
Pension liabilities
37.2
39.7
Other long-term liabilities
150.5
164.9
Total Liabilities
3,275.4
3,504.6
Equity:
ATI Stockholders’ Equity:
Preferred stock, par value $0.10: authorized-50,000,000 shares; issued-none
—
—
Common stock, par value $0.10: authorized-500,000,000 shares; issued-
142,871,688 shares at December 29, 2024 and 132,300,971 shares at
December 31, 2023; outstanding-141,387,049 shares at December 29, 2024
and 126,879,099 shares at December 31, 2023
14.3
13.2
Additional paid-in capital
1,943.9
1,697.1
Retained earnings (loss)
64.3
(70.1)
Treasury stock: 1,484,639 shares at December 29, 2024 and 5,421,872 shares
at December 31, 2023
(82.6)
(184.0)
Accumulated other comprehensive loss, net of tax
(89.5)
(83.2)
Total ATI Stockholders’ Equity
1,850.4
1,373.0
Noncontrolling Interests
104.8
107.5
Total Stockholders’ Equity
1,955.2
1,480.5
Total Liabilities and Stockholders’ Equity
$
5,230.6 $
4,985.1
The accompanying notes are an integral part of these statements.
F-44
ATI Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In millions)
Fiscal Year Ended
December 29,
2024
December 31,
2023
January 1,
2023
Operating Activities:
Net income
$
382.7 $
423.4 $
339.1
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
151.5
146.1
142.9
Share-based compensation
34.1
29.1
26.0
Deferred taxes
86.4
(138.2)
(0.1)
Gain from disposal of property, plant and equipment, net
(15.7)
(0.6)
(0.9)
Net loss (gain) from sales of businesses
(52.9)
0.6
112.2
Non-cash impairment charges
—
3.0
—
Change in operating assets and liabilities:
Pension plan contributions
—
(272.0)
(51.3)
Retirement benefits
4.4
53.8
(159.2)
Accounts receivable
(85.0)
(46.1)
(128.5)
Inventories
(118.5)
(51.8)
(190.8)
Accounts payable
87.6
(29.8)
156.1
Accrued income taxes
(0.3)
(4.8)
2.5
Accrued liabilities and other
(67.1)
(26.8)
(23.1)
Cash provided by operating activities
407.2
85.9
224.9
Investing Activities:
Purchases of property, plant and equipment
(239.1)
(200.7)
(130.9)
Proceeds from disposal of property, plant and equipment
27.6
3.8
3.1
Proceeds from sales of businesses, net of transaction costs
48.0
(0.3)
0.3
Other
3.9
4.0
0.8
Cash used in investing activities
(159.6)
(193.2)
(126.7)
Financing Activities:
Borrowings on long-term debt
—
425.0
—
Payments on long-term debt and finance leases
(29.6)
(25.2)
(23.1)
Net payments under credit facilities
(4.9)
(14.0)
(5.6)
Debt issuance costs
—
(6.2)
—
Receipt of convertible note capped call
76.1
—
—
Purchase of treasury stock
(260.0)
(85.2)
(139.9)
Sale to noncontrolling interests
—
—
6.4
Dividends paid to noncontrolling interests
(16.0)
(16.0)
(34.0)
Shares repurchased for income tax withholding on share-based compensation
(26.0)
(11.2)
(5.7)
Cash provided by (used in) financing activities
(260.4)
267.2
(201.9)
Effect of exchange rate changes on cash and cash equivalents
(7.6)
—
—
Less: Cash held for sale
(2.3)
—
—
Increase (decrease) in cash and cash equivalents
(22.7)
159.9
(103.7)
Cash and cash equivalents at beginning of year
743.9
584.0
687.7
Cash and cash equivalents at end of year
$
721.2 $
743.9 $
584.0
Amounts presented on the Consolidated Statements of Cash Flows may not agree to the corresponding changes in consolidated
balance sheet items due to the accounting for purchases and sales of businesses and the effects of foreign currency translation.
The accompanying notes are an integral part of these statements.
F-45
ATI Inc. and Subsidiaries
Statements of Changes in Consolidated Equity
ATI Stockholders
(In millions)
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
(Loss)
Treasury
Stock
Accumulated
Other
Comprehensive
Income (Loss)
Non-
controlling
Interests
Total
Equity
Balance, January 2, 2022
$
12.7 $ 1,596.7 $ (777.7) $
(4.8) $
(141.3) $
147.1 $
832.7
Net income
—
—
323.5
—
—
15.6
339.1
Other comprehensive income (loss)
—
—
—
—
73.9
(18.3)
55.6
Purchase of treasury stock
—
—
—
(139.9)
—
—
(139.9)
Conversion of convertible notes
0.3
45.4
(26.7)
63.5
—
—
82.5
Dividends paid to noncontrolling
interest
—
—
—
—
—
(34.0)
(34.0)
Sales of subsidiary shares to
noncontrolling interest
—
—
—
—
—
0.9
0.9
Employee stock plans
0.1
26.0
—
(5.8)
—
—
20.3
Balance, January 1, 2023
$
13.1 $ 1,668.1 $ (480.9) $
(87.0) $
(67.4) $
111.3 $ 1,157.2
Net income
—
—
410.8
—
—
12.6
423.4
Other comprehensive loss
—
—
—
—
(15.8)
(0.4)
(16.2)
Purchase of treasury stock
—
—
—
(85.8)
—
—
(85.8)
Dividends paid to noncontrolling
interest
—
—
—
—
—
(16.0)
(16.0)
Employee stock plans
0.1
29.0
—
(11.2)
—
—
17.9
Balance, December 31, 2023
$
13.2 $ 1,697.1 $
(70.1) $ (184.0) $
(83.2) $
107.5 $ 1,480.5
Net income
—
—
367.8
—
—
14.9
382.7
Other comprehensive loss
—
—
—
—
(6.3)
(1.6)
(7.9)
Conversion of convertible notes
0.9
140.1
(233.9)
384.6
—
—
291.7
Convertible note capped call
—
76.1
—
—
—
—
76.1
Purchase of treasury stock
—
—
—
(260.0)
—
—
(260.0)
Dividends paid to noncontrolling
interest
—
—
—
—
—
(16.0)
(16.0)
Employee stock plans
0.2
30.6
0.5
(23.2)
—
—
8.1
Balance, December 29, 2024
$
14.3 $ 1,943.9 $
64.3 $
(82.6) $
(89.5) $
104.8 $ 1,955.2
The accompanying notes are an integral part of these statements.
F-46
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
Principles of Consolidation and Reporting
The consolidated financial statements include the accounts of ATI Inc. and its subsidiaries. The financial results of majority-
owned joint ventures are consolidated into the Company’s operating results and financial position, with the minority ownership
interest recognized in the consolidated statement of operations as net income attributable to noncontrolling interests, and as
equity attributable to the noncontrolling interests within total stockholders’ equity. The results for the Shanghai STAL
Precision Stainless Steel Company Limited (STAL) are reported on a one month lag. Investments in which the Company
exercises significant influence, but which it does not control (generally a 20% to 50% ownership interest) are accounted for
under the equity method of accounting, whereby ATI’s carrying value of the equity method investment on the consolidated
balance sheet is the capital investment and any undistributed profit or loss. The investments are classified in other (noncurrent)
assets on the consolidated balance sheet. The profit or loss attributable to ATI from equity method investments is included in
the consolidated statements of operations as a component of Other (non-operating) income (expense). See Note 7 for further
explanation of the Company’s joint ventures. Intercompany accounts and transactions have been eliminated. Unless the
context requires otherwise, “ATI” and the “Company” refer to ATI Inc. and its subsidiaries.
Fiscal Year
The Company follows a 4-4-5 or 5-4-4 fiscal calendar, whereby each fiscal quarter consists of thirteen weeks grouped into two
four-week months and one five-week month, and its fiscal year ends on the Sunday closest to December 31. Unless otherwise
stated, references to years in this Annual Report on Form 10-K relate to fiscal years, rather than calendar years. Fiscal years
2024, 2023 and 2022 ended on December 29, 2024, December 31, 2023 and January 1, 2023, respectively. All fiscal years
presented include 52 weeks of operations.
Risks and Uncertainties and Use of Estimates
The preparation of consolidated financial statements in conformity with United States (U.S.) generally accepted accounting
principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the
date of the financial statements, as well as the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. Management believes that the estimates are reasonable.
The Company markets its products to a diverse customer base, principally throughout the U.S. No single customer accounted
for more than 10% of sales for any year presented. The core end markets for ATI’s products are customers in the aerospace &
defense, specialty energy, electronics, and medical markets.
At December 29, 2024, ATI has approximately 7,700 active employees, of which approximately 15% are located outside the
U.S. Approximately 35% of ATI’s workforce is covered by various collective bargaining agreements (CBAs), predominantly
with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied & Industrial Service Workers International
Union (USW). The Company is currently renegotiating the CBAs, which expire on February 28, 2025, that cover
approximately 1,100 USW-represented full-time employees within our Advanced Alloys & Solutions operations. There can be
no assurance that the Company will successfully conclude these renegotiations to replace the expiring CBA.
Cash and Cash Equivalents
Cash equivalents are highly liquid investments that are readily convertible to cash with original maturities of three months or
less.
Accounts Receivable
Accounts receivable are presented net of a reserve for doubtful accounts of $15.0 million and $3.2 million at December 29,
2024 and December 31, 2023, respectively. Trade credit is extended based upon periodically updated evaluations of each
customer’s ability to perform its obligations. The Company determines a reserve for doubtful accounts based on an aging of
accounts receivable and reviews of specific accounts identified as collection risks, as well as expected credit losses. Amounts
are written-off against the reserve in the period it is determined that the receivable is uncollectible.
F-47
Inventories
Inventories are stated at the lower of cost or net realizable value with the cost of inventories determined using either first in,
first out (FIFO) or average cost methods. Costs include direct material, direct labor and applicable manufacturing and
engineering overhead, and other direct costs. The term net realizable value is defined as estimated selling price in the ordinary
course of business, less reasonably predictable costs of completion, disposal and transportation.
The Company evaluates product lines on a quarterly basis to identify inventory carrying values that exceed estimated net
realizable value. The calculation of a resulting reserve, if any, is recognized as an expense in the period that the need for the
reserve is identified. It is the Company’s general policy to write-down to scrap value any inventory that is identified as slow-
moving or aged more than twelve months, subject to sales, backlog and anticipated order considerations. In some instances this
aging criterion is up to twenty-four months. Inventory valuation reserves also include amounts pertaining to intercompany
profit elimination between different subsidiaries.
Long-Lived Assets
Property, plant and equipment are recorded at cost, including capitalized interest, and include long-lived assets acquired under
finance leases. Depreciation is primarily recorded using the straight-line method. The Company periodically reviews estimates
of useful life and production capacity assigned to new and in-service assets. Significant enhancements, including major
maintenance activities that extend the lives of property and equipment, are capitalized. Costs related to repairs and maintenance
are charged to expense in the period incurred. The cost and related accumulated depreciation of property and equipment retired
or disposed of are removed from the accounts and any related gains or losses are included in income.
The Company monitors the recoverability of the carrying value of its long-lived assets. An impairment charge is recognized
when an indicator of impairment occurs and the expected net undiscounted future cash flows from an asset’s use (including any
proceeds from disposition) are less than the asset’s carrying value and the asset’s carrying value exceeds its fair value. If an
impairment loss is recognized, the adjusted carrying value of the long-lived asset is its new cost basis and this new cost basis is
depreciated over the remaining useful life of the asset. Assets to be disposed of by sale are stated at the lower of their fair
values or carrying amounts and depreciation is no longer recognized.
Leases
The Company classifies leases as either operating or financing and records a right-of-use (ROU) asset and a lease liability on
the consolidated balance sheets as further discussed below. The lease liability is equal to the present value of the minimum
lease payments for the term of the lease, including any optional renewal periods determined to be reasonably certain to be
exercised, using the discount rate determined at lease commencement. This discount rate is the rate implicit in the lease, if
known; otherwise, the incremental borrowing rate (IBR) for the expected lease term is used. The Company’s IBRs approximate
the rate the Company would have to pay to borrow on a collateralized basis over a similar term at lease inception. The ROU
asset is equal to the initial measurement of the lease liability plus any lease payments made to the lessor at or before the
commencement date and any unamortized initial direct costs incurred by the lessee, less any unamortized lease incentives
received. The Company has elected to not separate lease components from non-lease components for all asset classes, and has
made an accounting policy election to apply the short-term exception, which does not require the capitalization of leases with
terms of 12 months or less.
ROU assets for operating leases are classified in other long-term assets, and ROU assets for finance leases are classified in
property, plant and equipment on the consolidated balance sheet. For operating leases, short-term lease liabilities are classified
in other current liabilities, and long-term lease liabilities are classified in other long-term liabilities on the consolidated balance
sheet. For finance leases, short-term lease liabilities are classified in short-term debt, and long-term lease liabilities are
classified in long-term debt on the consolidated balance sheet. On the cash flow statement, payments for operating leases are
classified as operating activities. Payments for finance leases are classified as a financing activity, except for the interest
component of the payment which is classified as an operating activity.
The Company has lease contracts for real property and machinery and equipment. At inception of a contract, the Company
determines whether the contract is or contains a lease. If the Company has a right to obtain substantially all of the economic
benefits from the use of the identified asset and the right to direct the use of the asset, then the contract contains a lease. Several
of the Company’s real property lease contracts include options to extend the lease term, and the Company reassesses the
likelihood of renewal on at least an annual basis. In addition, several real property leases include variable lease payments, for
items such as common area maintenance and utilities, which are expensed as incurred as variable lease expense.
F-48
Goodwill
Goodwill is reviewed annually for impairment, or more frequently if impairment indicators arise. The review for goodwill
impairment requires a comparison of the fair value of each reporting unit that has goodwill associated with its operations with
its carrying amount, including goodwill. If this comparison reflects impairment, then the loss would be measured as the excess
of the carrying value over the calculated fair value.
Generally accepted accounting principles provide the option to qualitatively assess goodwill for impairment before completing
a quantitative assessment. Under the qualitative approach, if, after assessing the totality of events or circumstances, including
both macroeconomic, industry and market factors, and entity-specific factors, the Company determines it is likely (more likely
than not) that the fair value of a reporting unit is greater than its carrying amount, then the quantitative impairment analysis is
not required. The quantitative assessment may be performed each year for a reporting unit at the Company’s option without
first performing a qualitative assessment. The Company’s quantitative assessment of goodwill for possible impairment includes
estimating the fair value of a reporting unit which has goodwill associated with its operations using discounted cash flow and
multiples of cash earnings valuation techniques, plus valuation comparisons to recent public sale transactions of similar
businesses, if any. These impairment assessments and valuation methods require the Company to make estimates and
assumptions regarding revenue growth, changes in working capital and capital expenditures, selling prices and profitability that
drive cash flows, and the weighted average cost of capital. Many of these assumptions are determined by reference to market
participants identified by the Company. Although management believes that the estimates and assumptions used were
reasonable, actual results could differ from those estimates and assumptions.
Other events and changes in circumstances may also require goodwill to be tested for impairment between annual measurement
dates. While a decline in stock price and market capitalization is not specifically cited as a goodwill impairment indicator, a
company’s stock price and market capitalization should be considered in determining whether it is more likely than not that the
fair value of a reporting unit is less that its carrying value. Additionally, a significant decline in a company’s stock price may
suggest that an adverse change in the business climate may have caused the fair value of one or more reporting units to fall
below carrying value. A sustained decline in market capitalization below book value may be determined to require an interim
goodwill impairment review.
Environmental
Costs that mitigate or prevent future environmental contamination or extend the life, increase the capacity or improve the safety
or efficiency of property utilized in current operations are capitalized. Other costs that relate to current operations or an existing
condition caused by past operations are expensed. Environmental liabilities are recorded when the Company’s liability is
probable and the costs are reasonably estimable, but generally not later than the completion of the feasibility study or the
Company’s recommendation of a remedy or commitment to an appropriate plan of action. The accruals are reviewed
periodically and, as investigations and remediations proceed, adjustments of the accruals are made to reflect new information as
appropriate. Accruals for losses from environmental remediation obligations are not discounted to their present value. The
accruals are not reduced by possible recoveries from insurance carriers or other third parties, but do reflect allocations among
potentially responsible parties (PRPs) at Federal Superfund sites or similar state-managed sites after an assessment is made of
the likelihood that such parties will fulfill their obligations at such sites and after appropriate cost-sharing or other agreements
are entered. The measurement of environmental liabilities by the Company is based on currently available facts, present laws
and regulations, and current technology. Such estimates take into consideration the Company’s prior experience in site
investigation and remediation, the data concerning cleanup costs available from other companies and regulatory authorities, and
the professional judgment of the Company’s environmental experts in consultation with outside environmental specialists,
when necessary.
Foreign Currencies
Assets and liabilities of international operations are translated into U.S. dollars using fiscal year-end exchange rates, while
revenues and expenses are translated at average exchange rates during the period. The resulting net translation adjustments are
recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Gains and losses for
transactions denominated in foreign currencies are reported in costs of sales or general and administrative expenses in the
consolidated statement of operations based on the underlying nature of the transaction.
F-49
Sales Recognition
The Company’s contracts with customers are comprised of purchase orders, and for larger customers long-term agreements
(LTAs). LTAs typically extend multiple years and are utilized by the Company and certain of its customers for its specialty
materials, in the form of mill products, powders, parts and components, to reduce supply uncertainty. While LTAs generally
define commercial terms including pricing, termination clauses and other contractual requirements, the Company has
determined that the contract with a customer is established when the customer purchase order is accepted or acknowledged.
Contracts (purchase orders) with customers typically relate to the manufacturing of products, which are defined on a line by line
basis, and each distinct good represents a single performance obligation that is satisfied at a point in time when control of the
product passes to the customer. For most transactions, control passes at the time of shipment in accordance with agreed upon
delivery terms. On occasion, shipping and handling charges occur after the customer obtains control of the good. When this
occurs, the shipping and handling services are considered activities to fulfill the promise to transfer the good. Sales for
conversion services that transform customer-owned inventory to a different dimension, product form, and/or changed
mechanical properties are recognized when the service is completed.
Pricing for the Company’s products is also defined in the customer purchase order or LTA on a line item basis and, in some
cases, includes variable consideration. Variable consideration is when the selling price of the good is not known or is subject to
adjustment under certain conditions. Types of variable consideration may include volume discounts, customer rebates and
surcharges. ATI also provides assurances that goods or services will meet the product specifications contained within the
acknowledged customer contract. As such, returns and refunds reserves are estimated based upon past product line history or,
at certain locations, on a claim by claim basis.
Certain customer agreements involving production of parts and components require revenue to be recognized over time due to
there being no alternative use for the product without significant economic loss and an enforceable right to payment including a
normal profit margin from the customer in the event of contract termination. The Company uses an input method for
determining the amount of revenue, and associated standard cost, to recognize over-time revenue, cost and gross margin for
these customer agreements. The input methods used for these agreements include costs incurred and labor hours expended,
both of which give an accurate representation of the progress made toward complete satisfaction of that particular performance
obligation.
Contract assets are recognized when ATI’s conditional right to consideration for goods or services have transferred to the
customer. A conditional right indicates that additional performance obligations associated with the contract are yet to be
satisfied. Contract assets are assessed separately for impairment purposes. When ATI’s right to consideration from the
customer is unconditional, this asset is accounted for as a receivable and presented separately from contract assets. A right is
unconditional if nothing other than the passage of time is required before payment of that consideration is due. Performance
obligations that are recognized as revenue at a point-in-time and are billed to the customer are recognized as accounts
receivable. Payment terms vary from customer to customer depending upon credit worthiness, prior payment history and other
credit considerations.
Contract costs are the incremental costs of obtaining and fulfilling a contract (i.e., costs that would not have been incurred if the
contract had not been obtained) to provide goods and services to customers. Contract costs for ATI largely consist of design
and development costs for molds, dies and other tools that ATI will own and that will be used in producing the products under
the supply arrangement. Contract costs are classified as non-current assets and amortized to expense on a systematic and
rational basis over a period consistent with the transfer to the customer of the goods or services to which the asset relates.
Contract liabilities are recognized when ATI has received consideration from a customer to transfer goods or services at a future
point in time when the Company performs under the contract. Elements of variable consideration discussed above may be
recorded as contract liabilities. In addition, progress billings and advance payments from customers for costs incurred to date
are also reported as contract liabilities.
Research and Development
Research, development and technical service activities are closely interrelated and directed toward development of new
products, improvement of existing products, quality assurance, development of new manufacturing methods, improvement of
existing manufacturing methods, and reducing the Company’s manufacturing costs. Research and development costs are
expensed as incurred. Company funded research and development costs were $19.6 million in fiscal year 2024, $20.7 million
in fiscal year 2023, and $16.3 million in fiscal year 2022. Customer funded research and development costs were $2.5 million
in fiscal year 2024, $1.4 million in fiscal year 2023, and $1.4 million in fiscal year 2022.
F-50
Government Assistance
The Company enters into agreements with U.S. federal agencies, U.S. state and local governments, and foreign governments
that provide financial assistance and incentives supporting both new capital projects to expand and enhance manufacturing
capabilities and also to sustain and maintain existing operations. Depending on the nature of the government program, the
financial impacts may be recorded as a reduction to cost of sales through direct offset of labor and overhead costs or lower
depreciation expense, or as a reduction of selling, general and administrative expenses for property tax abatement or other
similar categories. Benefits from government assistance are recognized as the activities are incurred, subject to ongoing
assessments of meeting other relevant terms such as employment or expenditure levels.
In November 2021, ATI entered into an agreement with the U.S. Department of Transportation under the Aviation
Manufacturing Jobs Protection (AMJP) program for a grant of up to $22.2 million. The receipt of the award was primarily
conditioned upon the Company committing to not furlough or lay off a defined group of employees in the High Performance
Materials & Components (HPMC) segment operations during the six-month period of performance between November 2021
and May 2022. The AMJP grant benefit was recognized over the six-month performance period as a reduction to cost of sales
in proportion to the compensation expense that the award was intended to defray, with $16.6 million recognized in fiscal year
2022 operating results. Cash receipts from the AMJP program were $11.0 million in fiscal year 2022, and this program is now
completed.
ATI is a party to various U.S. states’ economic development incentive programs that provide economic benefits in the forms of
property tax relief or cash payments to offset capital expenditures. These programs generally include requirements for levels of
capital spending and/or employment to qualify for the government assistance. For the fiscal years ended December 29, 2024,
December 31, 2023 and January 1, 2023, these state-level programs reduced selling, general and administrative expenses by
$1.7 million, $1.4 million, $1.6 million, respectively, and cash receipts were $2.5 million, $3.4 million and $2.8 million,
respectively. Receivables for ongoing programs are $1.2 million as of both December 29, 2024 and December 31, 2023.
Defined Benefit Pension and Postretirement Plans
The remeasurement of projected benefit obligation and plan assets for defined benefit pension plans are immediately recognized
in earnings through net periodic pension benefit cost within nonoperating retirement benefit expense on the consolidated
statements of operations, with pension plans to be remeasured annually in the fourth quarter or on an interim basis as triggering
events require remeasurement. For the remeasurement of projected benefit obligation and plan assets for defined benefit
postretirement plans, the Company defers the recognition of these gains and losses in accumulated other comprehensive loss on
the consolidated balance sheet, and the accumulated actuarial gains/losses are then amortized into net periodic benefit costs
within nonoperating retirement benefit expense on the consolidated statements of operations over the average expected
remaining life of plan participants.
Stock-based Compensation
The Company accounts for stock-based compensation transactions, such as nonvested restricted stock or stock units and
performance equity awards, using fair value. Compensation expense for an award is estimated at the date of grant and is
recognized over the requisite service period. Compensation expense is adjusted for equity awards that do not vest because
service or performance conditions are not satisfied. However, compensation expense already recognized on awards which vest
based solely on the attainment of market conditions, such as total shareholder return measures, is not adjusted based on the
award attainment status at the end of the measurement period. Compensation expense is adjusted for estimated forfeitures over
the award measurement period.
Income Taxes
The provision for, or benefit from, income taxes includes deferred taxes resulting from temporary differences in income for
financial and tax purposes using the liability method. Such temporary differences result primarily from differences in the
carrying value of assets and liabilities. Future realization of deferred income tax assets requires sufficient taxable income
within the carryback and/or carryforward period available under tax law.
The Company evaluates on a quarterly basis whether, based on all available evidence, it is probable that the deferred income tax
assets are realizable. Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit
of the deferred tax asset will not be realized. The evaluation includes the consideration of all available evidence, both positive
and negative, regarding the estimated future reversals of existing taxable temporary differences, estimated future taxable
income exclusive of reversing temporary differences and carryforwards, historical taxable income in prior carryback periods if
carryback is permitted, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit
carryforward from expiring unused. The verifiable evidence such as future reversals of existing temporary differences and the
F-51
ability to carryback are considered before the subjective sources such as estimated future taxable income exclusive of temporary
differences and tax planning strategies.
It is the Company’s policy to classify interest and penalties recognized on underpayment of income taxes as income tax
expense. It is also the Company’s policy to recognize deferred tax amounts stranded in accumulated other comprehensive
income (AOCI), which result from tax rate differences on changes in AOCI balances, as an element of income tax expense in
the period that the related balance sheet item associated with the AOCI balance ceases to exist. In the case of derivative
financial instruments accounted for as hedges, or marketable securities, ATI uses the portfolio method where the stranded
deferred tax amount is recognized when all items of a particular category, such as cash flow hedges of a particular risk such as a
foreign currency hedge, are settled. In the case of defined benefit pension and other postretirement benefit plans, the stranded
deferred tax balance is recognized as an element of income tax expense in the period the benefit plan is extinguished or
divested.
Net Income Per Common Share
Basic and diluted net income per share are calculated by dividing the net income available to common stockholders by the
weighted average number of common shares outstanding during the fiscal year. Diluted amounts assume the issuance of
common stock for all potentially dilutive share equivalents outstanding. The calculations of all diluted income/loss per share
figures for a period exclude the potentially dilutive effect of dilutive share equivalents if there is a net loss since the inclusion in
the calculation of additional shares in the net loss per share would result in a lower per share loss and therefore be anti-dilutive.
New Accounting Pronouncements Adopted
In September 2022, the Financial Accounting Standards Board (FASB) issued new accounting guidance related to disclosures
about supplier finance programs. Supplier finance programs allow a buyer to offer its suppliers the option for access to
payment in advance of an invoice due date, which is paid by a third-party finance provider or intermediary on the basis of
invoices that the buyer has confirmed as valid. This new guidance requires a buyer in a supplier finance program to disclose
sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity
during the period, changes from period to period, and potential magnitude, using both qualitative and quantitative information
about its supplier finance programs. This new guidance, with the exception of annual disclosures on rollforward information,
was effective for the Company in fiscal year 2023, and the Company adopted this new accounting guidance effective January 2,
2023. The annual rollforward information disclosures were effective for the Company in fiscal year 2024, and the Company
adopted this new accounting guidance effective January 1, 2024. The adoption of these changes did not have an impact on the
Company’s consolidated financial statements other than disclosure requirements which are included in Note 9.
In November 2023, the FASB issued new accounting guidance related to segment reporting disclosures. This guidance requires
additional disclosures on an annual and interim basis of segment information, including significant segment expenses that are
regularly provided to the chief operating decision maker (CODM) and the presentation and composition of other segment items,
which is the difference between segment revenue less segment expenses and the measure of segment profit or loss. The
guidance also requires that all current segment disclosures required on an annual basis be provided on an interim basis and
requires disclosure of the title and position of the CODM and how the CODM uses the reported measure of segment profit or
loss in assessing performance and allocating resources. This guidance does not change how an entity identifies its reportable
segments. The Company adopted this new guidance for annual disclosures for fiscal year 2024 and will adopt it for interim
disclosures in fiscal year 2025. The adoption of these changes did not have an impact on the Company’s consolidated financial
statements other than disclosure requirements which are included in Note 18.
Pending Accounting Pronouncements
In December 2023, the FASB issued new accounting guidance related to income tax disclosures. This guidance requires
entities to disclose specific categories in its annual rate reconciliation and provide additional information for reconciling items
that meet a quantitative threshold. This guidance also requires additional annual disclosures for income taxes paid and requires
disaggregation of income before tax, between domestic and foreign, and income tax expense, between federal, state and foreign.
This guidance also eliminates several current disclosure requirements related to the nature and estimate of the range of the
reasonably possible change in the unrecognized tax benefits balance in the next 12 months and making a statement that an
estimate of the range cannot be made and disclosing the cumulative amount of each type of temporary difference when a
deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to
subsidiaries and corporate joint ventures. This new guidance will be effective for the Company for fiscal year 2025 and must
be applied on a prospective basis with retrospective application permitted. Early adoption of this guidance is also permitted.
The Company does not expect to early adopt this guidance and does not expect these changes to have an impact on the
Company’s consolidated financial statements other than disclosure requirements.
F-52
In November 2024, the FASB issued new accounting guidance related to expense disaggregation disclosures. This guidance
requires entities to disclose specified information about certain costs and expenses including (1) the amounts of purchases of
inventory, employee compensation, depreciation, and intangible asset amortization, (2) include certain amounts that are already
required to be disclosed under current generally accepted accounting principles in the same disclosure as the other
disaggregation requirements, (3) a qualitative description of the amounts remaining in relevant expense captions that are not
separately disaggregated quantitatively, and (4) the total amount of selling expenses and, in annual reporting periods, an entity’s
definition of selling expenses. This new guidance for annual disclosures will be effective for the Company for fiscal year 2027
and for interim disclosures will be effective for the Company for fiscal year 2028. The guidance can be applied prospectively
or retrospectively and early adoption is permitted. The Company does not expect to early adopt this guidance and does not
expect these changes to have an impact on the Company’s consolidated financial statements other than disclosure requirements.
Note 2. Revenue from Contracts with Customers
Disaggregation of Revenue
The Company operates in two business segments: High Performance Materials & Components (HPMC) and Advanced Alloys
& Solutions (AA&S). Revenue is disaggregated within these two business segments by diversified global markets, primary
geographical markets, and diversified products. Comparative information of the Company’s overall revenues (in millions) by
global and geographical markets for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023 is as
follows:
Fiscal Year
(in millions)
2024
2023
2022
HPMC
AA&S
Total
HPMC
AA&S
Total
HPMC
AA&S
Total
Diversified Global Markets:
Aerospace & Defense:
Jet-Engines- Commercial
$ 1,365.4 $
92.4 $ 1,457.8 $ 1,255.3 $
78.2 $ 1,333.5 $ 975.7 $
87.8 $ 1,063.5
Airframes- Commercial
369.7
403.2
772.9
350.6
388.8
739.4
184.1
284.8
468.9
Defense
224.8
265.4
490.2
181.0
220.9
401.9
158.2
183.0
341.2
Total Aerospace & Defense
$ 1,959.9 $ 761.0 $ 2,720.9 $ 1,786.9 $ 687.9 $ 2,474.8 $ 1,318.0 $ 555.6 $ 1,873.6
Specialty Energy
96.8
187.8
284.6
93.9
179.3
273.2
113.6
163.0
276.6
Medical
115.5
109.4
224.9
102.6
74.3
176.9
73.2
89.9
163.1
Electronics
3.0
191.3
194.3
3.1
156.8
159.9
2.4
197.6
200.0
Other Core Markets
215.3
488.5
703.8
199.6
410.4
610.0
189.2
450.5
639.7
Core End Markets
2,175.2 1,249.5 3,424.7 1,986.5 1,098.3 3,084.8 1,507.2 1,006.1 2,513.3
Conventional Energy
9.8
292.2
302.0
10.6
404.0
414.6
35.0
441.7
476.7
Automotive
15.2
244.2
259.4
24.6
186.1
210.7
11.2
290.9
302.1
Construction/Mining
26.3
132.2
158.5
35.0
127.9
162.9
34.1
142.3
176.4
Other
52.0
165.5
217.5
63.5
237.2
300.7
53.7
313.8
367.5
Industrial Markets
$ 103.3 $ 834.1 $ 937.4 $ 133.7 $ 955.2 $ 1,088.9 $ 134.0 $ 1,188.7 $ 1,322.7
Total
$ 2,278.5 $ 2,083.6 $ 4,362.1 $ 2,120.2 $ 2,053.5 $ 4,173.7 $ 1,641.2 $ 2,194.8 $ 3,836.0
F-53
Fiscal Year
(in millions)
2024
2023
2022
HPMC
AA&S
Total
HPMC
AA&S
Total
HPMC
AA&S
Total
Primary Geographical Market:
United States
$ 1,134.0 $ 1,391.2 $ 2,525.2
$ 915.3 $ 1,335.5 $ 2,250.8
$ 742.9 $ 1,475.7 $ 2,218.6
China
57.6
242.0
299.6
70.1
263.2
333.3
59.8
292.0
351.8
Germany
202.5
57.2
259.7
204.2
38.8
243.0
148.4
52.5
200.9
United Kingdom
217.0
40.9
257.9
224.8
34.3
259.1
165.7
52.0
217.7
France
186.9
40.6
227.5
172.4
47.0
219.4
125.7
31.5
157.2
Canada
60.9
55.3
116.2
64.9
46.1
111.0
46.2
41.2
87.4
Rest of World
419.6
256.4
676.0
468.5
288.6
757.1
352.5
249.9
602.4
Total
$ 2,278.5 $ 2,083.6 $ 4,362.1
$ 2,120.2 $ 2,053.5 $ 4,173.7
$ 1,641.2 $ 2,194.8 $ 3,836.0
Comparative information of the Company’s major products based on their percentages of sales is included in the following
table. HRPF conversion service sales in the AA&S segment are excluded from this presentation.
Fiscal Year
2024
2023
2022
HPMC
AA&S
Total
HPMC
AA&S
Total
HPMC
AA&S
Total
Diversified Products:
Nickel-based alloys and
specialty alloys
41 %
49 %
45 %
44 %
54 %
49 %
49 %
54 %
52 %
Precision forgings, castings
and components
36 %
— %
20 %
33 %
— %
17 %
34 %
— %
15 %
Titanium and titanium-based
alloys
23 %
13 %
18 %
22 %
12 %
17 %
17 %
7 %
11 %
Zirconium and related alloys
— %
19 %
9 %
— %
15 %
7 %
— %
14 %
8 %
Precision rolled strip
— %
19 %
8 %
1 %
19 %
10 %
— %
25 %
14 %
Total
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
The Company maintains a backlog of confirmed orders totaling $3.9 billion, $3.8 billion and $2.9 billion at December 29, 2024,
December 31, 2023 and January 1, 2023, respectively. Due to the structure of the Company’s LTAs, 70% of this backlog at
December 29, 2024 represented booked orders with performance obligations that will be satisfied within the next twelve
months. The backlog does not reflect any elements of variable consideration.
Accounts Receivable
As of December 29, 2024 and December 31, 2023, accounts receivable with customers were $724.2 million and $628.2 million,
respectively. The following represents the rollforward of accounts receivable - reserve for doubtful accounts for the fiscal years
ended December 29, 2024, December 31, 2023 and January 1, 2023:
(in millions)
Accounts Receivable - Reserve for Doubtful Accounts
Balance as of January 2, 2022
$
3.8
Expense to increase the reserve
4.6
Write-off of uncollectible accounts
(0.7)
Balance as of January 1, 2023
7.7
Expense to increase the reserve
0.1
Write-off of uncollectible accounts
(4.6)
Balance as of December 31, 2023
3.2
Expense to increase the reserve
12.3
Write-off of uncollectible accounts
(0.5)
Balance as of December 29, 2024
$
15.0
F-54
Contract balances
The following represents the rollforward of contract assets and liabilities for the fiscal years ended December 29, 2024,
December 31, 2023 and January 1, 2023:
(in millions)
Contract Assets
Fiscal Year
Short-term
2024
2023
2022
Balance as of beginning of fiscal year
$
59.1 $
64.1 $
53.9
Recognized in current year
88.9
84.1
105.0
Reclassified to accounts receivable
(72.4)
(89.5)
(88.0)
Reclassification to/from contract liability
—
0.4
(6.8)
Balance as of period end
$
75.6 $
59.1 $
64.1
(in millions)
Contract Liabilities
Fiscal Year
Short-term
2024
2023
2022
Balance as of beginning of fiscal year
$
163.6 $
149.1 $
116.2
Recognized in current year
133.6
133.4
183.1
Amounts in beginning balance reclassified to revenue
(88.2)
(107.9)
(99.8)
Current year amounts reclassified to revenue
(56.3)
(40.9)
(72.3)
Other
—
(0.7)
0.7
Reclassification to/from long-term and contract asset
16.7
30.6
21.2
Balance as of period end
$
169.4 $
163.6 $
149.1
Fiscal Year
Long-term (a)
2024
2023
2022
Balance as of beginning of fiscal year
$
39.4 $
66.8 $
84.4
Recognized in current year
22.6
2.8
10.4
Reclassification to/from short-term
(16.7)
(30.2)
(28.0)
Balance as of period end
$
45.3 $
39.4 $
66.8
(a) Long-term contract liabilities are included in Other long-term liabilities on the consolidated balance sheets.
Contract costs for obtaining and fulfilling a contract were $12.0 million and $8.1 million as of December 29, 2024 and
December 31, 2023, respectively, which are reported in other long-term assets on the consolidated balance sheets.
Amortization expense for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023 of these contract
costs was $1.1 million, $1.2 million, and $1.0 million, respectively.
Note 3. Inventories
Inventories at December 29, 2024 and December 31, 2023 were as follows (in millions):
Fiscal Year
2024
2023
Raw materials and supplies
$
206.4 $
234.9
Work-in-process
1,144.1
973.6
Finished goods
71.0
114.5
1,421.5
1,323.0
Inventory valuation reserves
(68.5)
(75.5)
Total inventories, net
$
1,353.0 $
1,247.5
F-55
Note 4. Property, Plant and Equipment
Property, plant and equipment at December 29, 2024 and December 31, 2023 was as follows:
Fiscal Year
(In millions)
2024
2023
Land
$
30.8 $
32.3
Buildings
735.2
692.7
Equipment and leasehold improvements
3,145.3
3,024.3
3,911.3
3,749.3
Accumulated depreciation and amortization
(2,134.4)
(2,083.4)
Total property, plant and equipment, net
$
1,776.9 $
1,665.9
Construction in progress at December 29, 2024 and December 31, 2023 was $262.5 million and $305.9 million, respectively.
Capital expenditures on the consolidated statements of cash flows for the fiscal years ended December 29, 2024, December 31,
2023, and January 1, 2023 exclude $36.2 million, $41.9 million, and $38.3 million, respectively, of incurred but unpaid capital
expenditures that were included in property, plant and equipment and accrued at December 29, 2024, December 31, 2023, and
January 1, 2023, respectively. Depreciation and amortization for the fiscal years ended December 29, 2024, December 31,
2023 and January 1, 2023 was as follows:
Fiscal Year
(In millions)
2024
2023
2022
Depreciation of property, plant and equipment
$
118.8 $
117.4 $
115.4
Software and other amortization
32.7
28.7
27.5
Total depreciation and amortization
$
151.5 $
146.1 $
142.9
Note 5. Goodwill and Other Intangible Assets
At December 29, 2024 and December 31, 2023, the Company had $227.2 million of goodwill on its consolidated balance sheet,
all of which relates to the HPMC segment.
The Company performs its annual goodwill impairment evaluations in the fourth quarter of each fiscal year. The $227.2
million of goodwill as of December 29, 2024 on the Company’s consolidated balance sheet is comprised of $161.2 million at
the Forged Products reporting unit and $66.0 million at the Specialty Materials reporting unit. For the Company’s annual
goodwill impairment evaluation in fiscal year 2024, quantitative goodwill assessments were performed for these two HPMC
reporting units with goodwill. This quantitative fair value assessment includes discounted cash flow and multiples of cash
earnings valuation techniques, plus valuation comparisons to recent public sale transactions of similar businesses, if any, which
represents Level 3 unobservable information in the fair value hierarchy. These impairment assessments and valuation methods
require the Company to make estimates and assumptions regarding revenue growth, changes in working capital and capital
expenditures, selling prices and profitability that drive cash flows, and the weighted average cost of capital. Many of these
assumptions are determined by reference to market participants the Company has identified. For example, the weighted
average cost of capital used in the discounted cash flow assessment was 11.0% and the long-term growth rates ranged from 3%
to 3.5%. In order to validate the reasonableness of the estimated fair values of the reporting units as of the valuation date, a
reconciliation of the aggregate fair values of all reporting units to market capitalization was performed using a reasonable
control premium. Although the Company believes that the estimates and assumptions used were reasonable, actual results
could differ from those estimates and assumptions. The Specialty Materials reporting unit had a fair value that was
significantly in excess of carrying value. The Forged Products reporting unit had a fair value that exceeded carrying value by
approximately 95% for the fiscal year 2024 annual assessment, which increased compared to the annual evaluation for fiscal
year 2023. No impairments were determined to exist from the annual goodwill impairment evaluation for the fiscal years ended
December 29, 2024, December 31, 2023 and January 1, 2023.
No indicators of impairment were observed in fiscal years 2024, 2023 and 2022 associated with any of the Company’s long-
lived assets. Accumulated goodwill impairment losses as of December 29, 2024, December 31, 2023 and January 1, 2023 were
$528.0 million.
F-56
Other intangible assets, which are included in Other assets on the accompanying consolidated balance sheets as of December
29, 2024 and December 31, 2023 were as follows:
December 29, 2024
December 31, 2023
(in millions)
Gross
carrying
amount
Accumulated
amortization
Gross
carrying
amount
Accumulated
amortization
Technology
$
61.2 $
(41.8) $
61.2 $
(38.6)
Customer relationships
24.8
(13.5)
24.8
(12.6)
Trademarks
48.8
(35.8)
48.8
(32.5)
Total amortizable intangible assets
$
134.8 $
(91.1) $
134.8 $
(83.7)
Amortization expense related to intangible assets was approximately $7 million for each of the fiscal years ended December 29,
2024 and December 31, 2023 and $8 million for the fiscal year ended January 1, 2023. Annual amortization expense is
expected to be approximately $7 million for each of the fiscal years 2025 through 2028 and $4 million in fiscal year 2029.
Note 6. Divestitures
During the fourth quarter of 2024, the Company completed the sale of its precision rolled strip operations in New Bedford, MA,
which was part of the Specialty-Rolled Products business in the AA&S segment, and Remscheid, Germany, which was part of
our European business in the HPMC segment. A $52.9 million gain on sale of these operations is reported in gain on asset sales
and sales of businesses, net, on the consolidated statement of operations for fiscal year 2024, and is excluded from segment
results. The Company received proceeds, net of transaction costs, of $48.0 million in fiscal year 2024, which is reported as an
investing activity on the consolidated statement of cash flows. In fiscal year 2023, these operations had external sales of
approximately $100 million and income before tax of approximately $6 million.
Also during 2024, the Company approved plans to divest of other certain immaterial, non-core operations from the HPMC
segment. These non-core operations, which are classified as held for sale as of December 29, 2024, do not meet the criteria to
be classified as discontinued operations in the consolidated financial statements. The following are the assets and liabilities
classified as held for sale that are reported as prepaid expenses and other current assets, other long-term assets, other current
liabilities, and other long-term liabilities on the consolidated balance sheet as of December 29, 2024.
(in millions)
December 29,
2024
Assets
Cash
$
2.3
Accounts receivable, net
1.2
Inventories, net
3.6
Prepaid expenses and other current assets
0.7
Total current assets
7.8
Property, plant and equipment, net
0.2
Other assets
0.4
Total long-term assets
0.6
Total Assets
8.4
Liabilities
Other current liabilities
1.2
Total current liabilities
1.2
Other long-term liabilities
0.4
Total Liabilities
1.6
Net assets held for sale
$
6.8
F-57
On May 12, 2022, the Company completed the sale of its Sheffield, United Kingdom (U.K.) operations, which included
facilities for melting and re-melting, machining and bar mill operations, and was part of the Specialty Materials business in the
HPMC segment. A $112.2 million loss on sale of the Sheffield operations is reported in loss on asset sales and sales of
businesses, net, on the consolidated statement of operations for fiscal year 2022, and is excluded from HPMC segment results.
The loss includes $26.8 million related to the U.K. defined benefit pension plan, of which $26.1 million was reported as a net
pension asset but which was in a deficit funding position for U.K. statutory reporting purposes, and $0.7 million in accumulated
other comprehensive loss on the consolidated ATI balance sheet. The loss also includes $20.0 million of cumulative translation
adjustment foreign exchange losses since ATI’s acquisition of these operations in 1998. The Company received proceeds, net
of transaction costs, of $0.3 million in fiscal year 2022, which is reported as an investing activity on the consolidated statement
of cash flows.
The Company completed the sale of the Pico Rivera, CA operations, as part of the strategy to exit standard stainless products,
on January 31, 2022. The Company received cash proceeds of $6.2 million on the sale of these assets in fiscal year 2022. The
Company recognized a $6.8 million pretax gain on sale, including de-recognizing certain lease liabilities, which is reported in
loss on asset sales and sales of businesses, net, on the consolidated statement of operations in fiscal year 2022 and is excluded
from AA&S segment results.
Note 7. Joint Ventures
The financial results of majority-owned joint ventures are consolidated into the Company’s operating results and financial
position, with the minority ownership interest recognized in the consolidated statement of operations as net income attributable
to noncontrolling interests, and as equity attributable to the noncontrolling interests within total stockholders’ equity.
Investments in which the Company exercises significant influence, but which it does not control (generally a 20% to 50%
ownership interest) are accounted for under the equity method of accounting.
Majority-Owned Joint Ventures
STAL:
The Company has a 60% interest in the Chinese joint venture known as STAL. The remaining 40% interest in STAL is owned
by China Baowu Steel Group Corporation Limited, a state authorized investment company whose equity securities are publicly
traded in the People’s Republic of China. STAL is part of ATI’s AA&S segment, and manufactures Precision Rolled Strip®
(PRS) stainless products mainly for the electronics and automotive markets located in Asia. Cash and cash equivalents held by
STAL as of December 29, 2024 were $100.9 million.
Next Gen Alloys LLC:
The Company has a 51% interest in Next Gen Alloys LLC, a joint venture with GE Aviation for the development of a new
meltless titanium alloy powder manufacturing technology; however, there is no active development at this time. Next Gen
Alloys LLC funds its development activities through the sale of shares to the two joint venture partners, and in the first quarter
of fiscal year 2022 the Company received $0.9 million from sales of noncontrolling interests to its joint venture partner, which
is reported as a financing activity on the consolidated statements of cash flows. Cash and cash equivalents held by this joint
venture as of December 29, 2024 were $1.0 million.
Equity Method Joint Ventures
A&T Stainless:
The Company has a 50% interest in A&T Stainless, a joint venture with an affiliate company of Tsingshan Group (Tsingshan)
to produce 60-inch wide stainless sheet products for sale in North America. Tsingshan purchased its 50% joint venture interest
in A&T Stainless in fiscal year 2018 for $17.5 million, of which $12.0 million had been received by ATI through January 2,
2022. ATI received the remaining $5.5 million from Tsingshan in the fourth quarter of fiscal year 2022, which is reported as a
financing activity on the consolidated statement of cash flows. The A&T Stainless operations included the Company’s
previously-idled direct roll and pickle (DRAP) facility in Midland, PA. ATI provided hot-rolling conversion services to A&T
Stainless using the AA&S segment’s Hot-Rolling and Processing Facility. ATI accounts for the A&T Stainless joint venture
under the equity method of accounting.
In late March 2018, ATI filed for an exclusion from the Section 232 tariffs on behalf of A&T Stainless, which imported semi-
finished stainless slab products from Indonesia. In April 2019, the Company learned that this exclusion request was denied by
the U.S. Department of Commerce. ATI filed new requests on behalf of A&T Stainless for exclusion from the Section 232
tariffs in October 2019. These requests were denied by the U.S. Department of Commerce in the second quarter of fiscal year
F-58
2020, and the 25% tariff remained in place. Due to repeated tariff exclusion denials, the DRAP facility was idled in an orderly
shut down process that was completed in fiscal year 2020. ATI’s share of the A&T Stainless results were losses of $1.0 million
and $1.8 million for the fiscal years ended December 29, 2024 and December 31, 2023, respectively, and were income of $9.1
million for the fiscal year ended January 1, 2023, which are included within other income/expense, net, on the consolidated
statements of operations. In April 2022, ATI and A&T Stainless entered into a settlement agreement with the U.S. pursuant to
which the U.S., without admitting liability, agreed to refund a substantial portion of the Section 232 tariffs previously paid by
A&T Stainless. As a result of the settlement agreement, A&T Stainless recorded tariff refunds and accrued interest of
approximately $19.7 million, which was recognized as income by the joint venture in fiscal year 2022. ATI’s share of the A&T
Stainless results for the fiscal year ended January 1, 2023 included ATI’s $9.9 million share of this tariff refund and accrued
interest. AA&S segment results in fiscal years 2024 and 2023 include equity method recognition of A&T Stainless operating
losses of $1.0 million and $1.8 million, respectively, and in fiscal year 2022 include equity method recognition of A&T
Stainless operating income of $8.2 million. In fiscal year 2022, A&T Stainless reversed $1.8 million of previously-recognized
charges for contractual termination benefits as a result of revised estimates and ATI’s share of this credit for termination
benefits in fiscal year 2022 was excluded from AA&S segment results.
As of December 29, 2024 and December 31, 2023, ATI had net receivables from A&T Stainless for working capital advances
and administrative services of $0.6 million and $1.5 million, respectively.
Uniti:
ATI had a 50% interest in the industrial titanium joint venture known as Uniti LLC (Uniti), with the remaining 50% interest
held by VSMPO, a Russian producer of titanium, aluminum, and specialty steel products. On March 9, 2022, the Company
announced the termination of Uniti. No impairments were recorded as a result of the decision to terminate the Uniti joint
venture. The Company received its final distribution in the first quarter of 2024 as a result of the termination, and formal
dissolution occurred in the fourth quarter of 2024. Uniti was accounted for under the equity method of accounting. ATI’s share
of Uniti’s income was $0.2 million in fiscal year 2023 and $4.4 million in fiscal year 2022, which were included in AA&S
segment’s operating results, and within other income/expense, net, on the consolidated statements of operations. Sales to Uniti,
which are included in ATI’s consolidated statements of operations, were $4.9 million in fiscal year 2023 and $45.0 million in
fiscal year 2022.
Note 8. Asset Retirement Obligations
The Company maintains reserves where a legal obligation exists to perform an asset retirement activity and the fair value of the
liability can be reasonably estimated. These asset retirement obligations (AROs) include liabilities where the timing and (or)
method of settlement may be conditional on a future event, that may or may not be within the control of the entity. At
December 29, 2024, the Company had recognized AROs of $7.9 million related to landfill closures, decommissioning costs,
facility leases and conditional AROs associated with manufacturing activities using what may be characterized as potentially
hazardous materials.
Estimates of AROs are evaluated annually in the fourth quarter, or more frequently if material new information becomes
known. Accounting for asset retirement obligations requires significant estimation and in certain cases, the Company has
determined that an ARO exists, but the amount of the obligation is not reasonably estimable. The Company may determine that
additional AROs are required to be recognized as new information becomes available.
Changes in asset retirement obligations for the years ended December 29, 2024 and December 31, 2023 were as follows:
Fiscal Year
(In millions)
2024
2023
Balance at beginning of fiscal year
$
18.3 $
17.8
Accretion expense
0.5
0.7
Revision of estimates
(0.7)
—
Divestitures
(10.0)
—
Payments
(0.2)
(0.2)
Balance at end of fiscal year
$
7.9 $
18.3
During fiscal year 2024, the Company de-recognized $10.0 million of AROs in connection with the sale of its precision rolled
strip operations (see Note 6 for further explanation).
F-59
Note 9. Supplemental Financial Statement Information
Cash and cash equivalents at December 29, 2024 and December 31, 2023 were as follows:
Fiscal Year
(In millions)
2024
2023
Cash
$
391.5 $
329.8
Other short-term investments
329.7
414.1
Total cash and cash equivalents
$
721.2 $
743.9
Other current liabilities included salaries, wages and other employee-related liabilities of $113.6 million and $102.3 million at
December 29, 2024 and December 31, 2023, respectively, and accrued interest of $23.9 million and $23.7 million at December
29, 2024 and December 31, 2023, respectively.
Other income (expense) for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023 was as
follows:
Fiscal Year
(in millions)
2024
2023
2022
Rent, royalty income and other income
$
3.8 $
2.6 $
2.3
Gains from disposal of property, plant and equipment, net
11.6
0.3
0.2
Net equity income (loss) on joint ventures (See Note 7)
(1.0)
(1.6)
12.6
Joint venture restructuring credit (See Note 7)
—
—
0.9
Litigation settlement (See Note 21)
—
—
(28.5)
Total other income (expense), net
$
14.4 $
1.3 $
(12.5)
Gains from disposal of property, plant and equipment, net for the fiscal year ended December 29, 2024 include an $11.6 million
gain on the sale of certain oil and gas rights. These cash gains are reported as an investing activity on the consolidated
statement of cash flow for the fiscal year ended December 29, 2024.
Supplier Financing
The Company participates in supplier financing programs with two financial institutions to offer its suppliers the option for
access to payment in advance of an invoice due date. Under such programs, these financial institutions provide early payment
to suppliers at their request for invoices that ATI has confirmed as valid at a pre-determined discount rate commensurate with
the creditworthiness of ATI. As of December 29, 2024 and December 31, 2023, the Company had $34.8 million and $15.6
million, respectively, reported in accounts payable on the consolidated balance sheets under such programs. The following
represents the rollforward of the Company’s obligations under such programs for the fiscal year ended December 29, 2024:
(in millions)
Fiscal Year
2024
Balance as of beginning of fiscal year
$
15.6
New obligations confirmed
282.8
Obligations paid
(263.6)
Balance as of period end
$
34.8
Sale of Receivables Program
During the fourth quarter of 2024, the Company entered into an accounts receivables purchase agreement (Receivables
Purchase Agreement) with a third-party financial institution to periodically sell certain accounts receivables at a discount.
These accounts receivable sales are accounted for as a sale of assets under ASC 860, Transfers and Servicing, as the
Company’s continuing involvement is limited to servicing the accounts receivable, collecting the payments for the underlying
accounts receivables and remitting such collections to the financial institution. The financial institution is responsible for any
credit risk associated with the sold accounts receivables. The Company receives the purchase price, equal to the accounts
receivable less the discount, at the time of the sale.
F-60
The Company sold $13.5 million of its receivables under this program during the fiscal year ended December 29, 2024,
resulting in de-recognition of the receivables from the Company’s consolidated balance sheet. The Company had no amounts
collected on behalf of the financial institution under the Receivables Purchase Agreement at December 29, 2024 and the loss on
the sales of accounts receivables were not material to the Company. The cash received on these sales of accounts receivable
during the fiscal year ended December 29, 2024 is presented in changes in receivables within operating activities in the
consolidated statement of cash flows.
Other Customer Receivable Sales
In the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023, the Company sold $300 million, $308
million and $133 million, respectively, of certain customers’ accounts receivables through programs established by those
customers with third-party financial institutions. These customers have extended payment terms and provide the programs to
enable suppliers to receive more timely payments. The Company has no continuing involvement with the receivables sold
under these programs, including no servicing requirement. The proceeds from these transactions are presented in changes in
receivables within operating activities in the consolidated statement of cash flows. The costs associated with these transactions
of $6.0 million, $6.3 million and $1.5 million are reflected in the Company’s consolidated statement of operations for the fiscal
years ended December 29, 2024, December 31, 2023 and January 1, 2023, respectively.
Note 10. Debt
Debt at December 29, 2024 and December 31, 2023 was as follows:
Fiscal Year
(In millions)
2024
2023
ATI Inc. 7.25% Notes due 2030
$
425.0 $
425.0
ATI Inc. 5.875% Senior Notes due 2027
350.0
350.0
ATI Inc. 5.125% Senior Notes due 2031
350.0
350.0
ATI Inc. 4.875% Notes due 2029
325.0
325.0
ATI Inc. 3.5% Convertible Senior Notes due 2025
—
291.4
Allegheny Ludlum 6.95% Debentures due 2025 (a)
150.0
150.0
ABL Term Loan
200.0
200.0
U.S. revolving credit facility
—
—
Foreign credit agreements
—
5.0
Finance leases and other
109.5
102.8
Debt issuance costs
(14.2)
(19.6)
Total short-term and long-term debt
1,895.3
2,179.6
Short-term debt and current portion of long-term debt
180.4
31.9
Total long-term debt
$
1,714.9 $
2,147.7
(a)
The payment obligations of these debentures issued by Allegheny Ludlum, LLC are fully and unconditionally guaranteed
by ATI.
Interest expense was $124.2 million in fiscal year 2024, $105.8 million in fiscal year 2023, and $92.1 million in fiscal year
2022. Interest expense was reduced by $11.8 million, $13.5 million, and $5.1 million, in fiscal years 2024, 2023, and 2022,
respectively, from interest capitalization on capital projects. Interest and commitment fees paid were $131.4 million in fiscal
year 2024, $114.7 million in fiscal year 2023, and $92.8 million in fiscal year 2022. Net interest expense includes interest
income of $16.0 million in fiscal year 2024, $13.0 million in fiscal year 2023, and $4.7 million in fiscal year 2022.
Scheduled principal payments during the next five fiscal years are $180.5 million in 2025, $25.0 million in 2026, $572.2
million in 2027, $16.7 million in 2028, and $335.8 million in 2029. See Note 11, Leases, for the portion of these scheduled
principal payments that are related to finance leases.
2030 Notes
In August 2023, ATI issued $425 million aggregate principal amount of 7.25% Senior Notes due 2030 (2030 Notes). Interest
on the 2030 Notes is payable semi-annually in arrears at a rate of 7.25% per year. The 2030 Notes will mature on August 15,
2030. Net proceeds were $418.8 million from this issuance, of which $222 million was used to fund ATI’s U.S. qualified
defined benefit pension plan in order to facilitate a pension derisking strategy (see Note 14), and the remaining proceeds were
F-61
used for liquidity and general corporate purposes. Underwriting fees and other third-party expenses for the issuance of the 2030
Notes were $6.2 million, and are being amortized to interest expense over the 7-year term of the 2030 Notes. The 2030 Notes
are unsecured and unsubordinated obligations of the Company and equally ranked with all of its existing and future senior
unsecured debt. The 2030 Notes restrict the Company’s ability to create certain liens, to enter into sale leaseback transactions,
guarantee indebtedness and to consolidate or merge all, or substantially all, of its assets. The Company has the option to
redeem the 2030 Notes, as a whole or in part, at any time or from time to time, on at least 15 days, but not more than 60 days,
prior notice to the holders of the Notes at redemption prices specified in the 2030 Notes. The 2030 Notes are subject to
repurchase upon the occurrence of a change in control repurchase event (as defined in the 2030 Notes) at a repurchase price in
cash equal to 101% of the aggregate principal amount of the Notes repurchased, plus any accrued and unpaid interest on the
2030 Notes repurchased.
2025 Convertible Notes
During the third quarter of 2024, the Company notified holders of the $291.4 million outstanding principal amount of its 3.5%
Convertible Notes due 2025 (2025 Convertible Notes) that they would be redeemed prior to their maturity date. The holders of
any outstanding 2025 Convertible Notes had the right to convert the principal amount of such notes into shares of ATI’s
common stock prior to the redemption date. Any 2025 Convertible Notes not tendered for conversion prior to the redemption
date were redeemed in cash at a redemption price equal to the principal amount, plus accrued and unpaid interest.
As a result, $291.0 million principal amount of the outstanding notes was converted at a rate of 64.7178 shares of ATI common
stock per $1,000 principal amount, equivalent to a conversion price of $15.45 per share or 18.8 million shares of ATI common
stock. Due to the early redemption of the 2025 Convertible Notes, the conversion rate was a premium to the conversion rate of
64.5745 shares of ATI common stock per $1,000 principal amount, or approximately $15.49 per share, that would have been
due at maturity. The remaining $0.4 million of outstanding principal balance were not tendered for conversion and, as a result,
the Company redeemed those for cash.
For those holders who exercised the conversion rights, the terms of the 2025 Convertible Notes provided that any accrued but
unpaid interest at the date of conversion was forfeited. As a result, accrued interest from the last interest payment date of June
15, 2024 through the date of conversion, totaling $2.3 million, was credited to additional paid-in capital. In addition, the
remaining unamortized deferred issuance costs of $1.6 million at the date of conversion were charged to additional paid-in
capital.
Coincident with its redemption of the 2025 Convertible Notes, the Company also settled the capped call transactions initiated as
part of the issuance of the 2025 Convertible Notes. The capped call transactions included a cap price of $19.76 per share and
were settled for $76.1 million in cash, which is recorded as additional paid-in capital on the consolidated balance sheet and as a
financing activity on the consolidated statement of cash flows.
As of December 31, 2023, the fair value of the 2025 Convertible Notes was $864 million based on the quoted market price,
which is classified in Level 1 of the fair value hierarchy. The 2025 Convertible Notes had a 3.5% cash coupon rate that was
payable semi-annually in arrears on each June 15 and December 15. Including amortization of deferred issuance costs, the
effective interest rate up to the time of conversion was 4.2% for the fiscal years ended December 29, 2024, December 31, 2023
and January 1, 2023. Remaining deferred issuance costs were $2.9 million at December 31, 2023. Interest expense on the 2025
Convertible Notes was as follows:
Fiscal Year
(in millions)
2024
2023
2022
Contractual coupon rate
$
7.2 $
10.2 $
10.2
Amortization of debt issuance costs
1.3
1.9
1.8
Total interest expense
$
8.5 $
12.1 $
12.0
2022 Convertible Notes
In fiscal year 2022, $82.5 million of the 2022 Convertible Senior Notes were converted into 5.7 million shares of ATI common
stock, with the remaining $1.7 million of outstanding principal balance paid in cash for notes that were not converted at the July
1, 2022 maturity date. The conversion rate for the 2022 Convertible Notes was 69.2042 shares of ATI common stock per
$1,000 principal amount of the 2022 Convertible Notes, equivalent to a conversion price of $14.45 per share.
F-62
Interest on the 2022 Convertible Notes at the 4.75% cash coupon rate was payable semi-annually in arrears on each January 1
and July 1. Including amortization of deferred issuance costs, the effective interest rate was 5.4% for the fiscal year ended
January 1, 2023. Interest expense on the 2022 Convertible Notes was as follows:
Fiscal Year
(in millions)
2022
Contractual coupon rate
$
2.0
Amortization of debt issuance costs
0.3
Total interest expense
$
2.3
Credit Agreements
The Company has an Asset Based Lending (ABL) credit facility, which is collateralized by the accounts receivable and
inventory of the Company’s operations. The ABL credit facility also provides the Company with the option of including
certain machinery and equipment as additional collateral for purposes of determining availability under the facility. The ABL
credit facility, which matures in September 2027, includes a $600 million revolving credit facility, a letter of credit sub-facility
of up to $200 million, a $200 million term loan (ABL Term Loan), and a swing loan facility of up to $60 million. The ABL
Term Loan has an interest rate of 2.0% above adjusted Secured Overnight Financing Rate (SOFR) and can be prepaid in
increments of $25 million if certain minimum liquidity conditions are satisfied. In addition, the Company has the right to
request an increase of up to $300 million under the revolving credit facility for the duration of the ABL. The Company
previously maintained a $50 million floating-for-fixed interest rate swap which converted a portion of the ABL Term Loan to a
4.21% fixed interest rate that matured in June 2024.
The applicable interest rate for revolving credit borrowings under the ABL credit facility includes interest rate spreads based on
available borrowing capacity that range between 1.25% and 1.75% for SOFR-based borrowings and between 0.25% and 0.75%
for base rate borrowings. The ABL credit facility contains a financial covenant whereby the Company must maintain a fixed
charge coverage ratio of not less than 1.00:1.00 after an event of default has occurred and is continuing or if the undrawn
availability under the ABL revolving credit portion of the facility is less than the greater of (i) 10% of the then applicable
maximum loan amount under the revolving credit portion of the ABL and the outstanding ABL Term Loan balance, or (ii)
$60.0 million. The Company was in compliance with the fixed charge coverage ratio as of December 29, 2024. Additionally,
the Company must demonstrate minimum liquidity specified by the facility during the 90-day period immediately preceding the
stated maturity date of its 6.95% Debentures due 2025 issued by the Company’s wholly owned subsidiary, Allegheny Ludlum
LLC. The ABL also contains customary affirmative and negative covenants for credit facilities of this type, including
limitations on the Company’s ability to incur additional indebtedness or liens or to enter into investments, mergers and
acquisitions, dispositions of assets and transactions with affiliates, some of which are more restrictive, at any time during the
term of the ABL when the Company’s fixed charge coverage ratio is less than 1.00:1.00 and its undrawn availability under the
revolving portion of the ABL is less than the greater of (a) $120 million or (b) 20% of the sum of the maximum loan amount
under the revolving credit portion of the ABL and the outstanding ABL Term Loan balance. On September 9, 2022, the
Company amended and restated the ABL and costs associated with entering into this amendment were $2.4 million, and are
being amortized to interest expense over the term of the facility ending September 2027, along with $1.7 million of
unamortized deferred costs previously recorded for the ABL.
As of December 29, 2024, there were no outstanding borrowings under the revolving portion of the ABL, and $30.5 million
was utilized to support the issuance of letters of credit. There were no revolving credit borrowings under the ABL during fiscal
year 2024. There were average revolving credit borrowings of $13 million bearing an average annual interest rate of 6.5%
under the ABL during fiscal year 2023. The Company also has foreign credit facilities, primarily in China, that total $70
million based on December 29, 2024 foreign exchange rates, none of which was drawn as of December 29, 2024 and $5.0
million of which was drawn as of December 31, 2023.
The Company has no off-balance sheet financing relationships as defined in Item 303(a)(4) of SEC Regulation S-K, with
variable interest entities, structured finance entities, or any other unconsolidated entities. At December 29, 2024, the Company
had not guaranteed any third-party indebtedness.
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Note 11. Leases
The following represents the components of lease cost and other information for both operating and financing leases for the
fiscal years 2024, 2023 and 2022:
($ in millions)
Fiscal Year
2024
2023
2022
Lease Cost
Finance Lease Cost:
Amortization of right of use asset
$
14.1
$
10.9
$
8.9
Interest on lease liabilities
6.3
4.6
4.1
Operating lease cost
17.0
17.6
16.4
Short-term lease cost
6.3
4.5
2.9
Variable lease cost
0.7
1.0
1.0
Sublease income
(1.2)
(0.4)
—
Total lease cost
$
43.2
$
38.2
$
33.3
Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases
$
6.1
$
4.6
$
4.1
Operating cash flows from operating leases
$
18.8
$
16.8
$
17.4
Financing cash flows from finance leases
$
29.1
$
24.9
$
20.9
Right of use assets obtained in exchange for new finance lease liabilities
$
31.6
$
54.6
$
15.3
Right of use assets obtained in exchange for new operating lease
liabilities
$
12.1
$
25.8
$
18.0
Weighted average remaining lease term - finance leases
4 years
4 years
4 years
Weighted average remaining lease term - operating leases
7 years
7 years
6 years
Weighted average discount rate - finance leases
6.3 %
5.4 %
5.6 %
Weighted average discount rate - operating leases
7.0 %
7.1 %
6.8 %
The following table reconciles future minimum undiscounted rental commitments for operating leases to the operating lease
liabilities recorded on the consolidated balance sheet as of December 29, 2024 (in millions):
Fiscal Year
December 29, 2024
2025
$
17.3
2026
15.8
2027
12.6
2028
10.6
2029
8.6
2030 and thereafter
17.4
Total undiscounted lease payments
$
82.3
Present value adjustment
(14.0)
Operating lease liabilities
$
68.3
F-64
The following table reconciles future minimum undiscounted rental commitments for finance leases to the finance lease
liabilities recorded on the consolidated balance sheet as of December 29, 2024 (in millions):
Fiscal Year
December 29, 2024
2025
$
35.0
2026
27.9
2027
24.0
2028
17.4
2029
10.7
2030 and thereafter
4.4
Total undiscounted lease payments
$
119.4
Present value adjustment
(10.4)
Finance lease liabilities
$
109.0
The Company has agreed to enter into certain finance lease contracts with lenders for progress payments on machinery and
equipment that is being constructed at the request and specification of the Company. As of December 29, 2024, the lenders had
made $54.3 million of progress payments on behalf of the Company, and $41.1 million of progress payments are scheduled to
be paid. Upon payment of the final progress payments by the lenders, finance leases will commence, and $95.4 million,
discounted using the applicable discount rates at lease inceptions, of ROU assets and lease liabilities will be recognized by the
Company. Progress payments made on behalf of the Company in fiscal years 2024, 2023 and 2022 include $9.7 million, $2.8
million and $1.8 million, respectively, received as proceeds on the sale of ongoing construction in progress projects that were
converted to leases, which is presented as investing activities source of cash on the consolidated statements of cash flows for the
fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023.
Note 12. Derivative Financial Instruments and Hedging
As part of its risk management strategy, the Company, from time-to-time, utilizes derivative financial instruments to manage its
exposure to changes in raw material prices, energy costs, foreign currencies, and interest rates. In accordance with applicable
accounting standards, the Company accounts for most of these contracts as hedges.
The Company sometimes uses futures and swap contracts to manage exposure to changes in prices for forecasted purchases of
raw materials, such as nickel, and natural gas. Under these contracts, which are generally accounted for as cash flow hedges,
the price of the item being hedged is fixed at the time that the contract is entered into and the Company is obligated to make or
receive a payment equal to the net change between this fixed price and the market price at the date the contract matures.
The majority of ATI’s products are sold utilizing raw material surcharges and index mechanisms. However, as of December
29, 2024, the Company had entered into financial hedging arrangements primarily at the request of its customers, related to firm
orders, for an aggregate notional amount of approximately 4 million pounds of nickel with hedge dates through fiscal year
2027. The aggregate notional amount hedged is approximately 5% of a single year’s estimated nickel raw material purchase
requirements. These derivative instruments are used to hedge the variability of a selling price that is based on the London
Metals Exchange (LME) index for nickel, as well as to hedge the variability of the purchase cost of nickel based on this LME
index. Any gain or loss associated with these hedging arrangements is included in sales or cost of sales, depending on whether
the underlying risk being hedged was the variable selling price or the variable raw material cost, respectively.
At December 29, 2024, the outstanding financial derivatives used to hedge the Company’s exposure to energy cost volatility
included natural gas cost hedges. At December 29, 2024, the company hedged approximately 75% of the Company’s annual
forecasted domestic requirements for natural gas for fiscal year 2025 and approximately 35% for fiscal year 2026.
While the majority of the Company’s direct export sales are transacted in U.S. dollars, foreign currency exchange contracts are
used, from time-to-time, to limit transactional exposure to changes in currency exchange rates for those transactions
denominated in a non-U.S. currency. The Company sometimes purchases foreign currency forward contracts that permit it to
sell specified amounts of foreign currencies expected to be received from its export sales for pre-established U.S. dollar
amounts at specified dates. In addition, the Company may also hedge forecasted capital expenditures and designate cash
balances held in foreign currencies as hedges of forecasted foreign currency transactions. At December 29, 2024, the Company
had no significant outstanding foreign currency forward contracts.
The Company may enter into derivative interest rate contracts to maintain a reasonable balance between fixed- and floating-rate
debt. The Company previously maintained a $50 million floating-for-fixed interest rate swap which converted a portion of the
ABL Term Loan to a 4.21% fixed rate that matured during the quarter ended June 30, 2024. There are no outstanding
derivative interest rate contracts at December 29, 2024.
F-65
There are no credit risk-related contingent features in the Company’s derivative contracts, and the contracts contained no
provisions under which the Company has posted, or would be required to post, collateral. The counterparties to the Company’s
derivative contracts were substantial and creditworthy commercial banks that are recognized market makers. The Company
controls its credit exposure by diversifying across multiple counterparties and by monitoring credit ratings and credit default
swap spreads of its counterparties. The Company also enters into master netting agreements with counterparties when possible.
The fair values of the Company’s derivative financial instruments are presented below, representing the gross amounts
recognized which are not offset by counterparty or by type of item hedged. All fair values for these derivatives were measured
using Level 2 information as defined by the accounting standard hierarchy, which includes quoted prices for similar assets or
liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs
derived principally from or corroborated by observable market data.
(In millions)
December 29,
2024
December 31,
2023
Asset derivatives
Balance sheet location
Derivatives designated as hedging instruments:
Foreign exchange contracts
Prepaid expenses and other current assets
$
0.2 $
0.1
Natural gas contracts
Prepaid expenses and other current assets
0.8
—
Interest rate swap
Prepaid expenses and other current assets
—
0.7
Natural gas contracts
Other assets
0.9
0.1
Total derivatives designated as hedging instruments
1.9
0.9
Total asset derivatives
$
1.9 $
0.9
Liability derivatives
Balance sheet location
Derivatives designated as hedging instruments:
Natural gas contracts
Other current liabilities
$
1.7 $
5.6
Nickel and other raw material contracts
Other current liabilities
4.2
7.5
Natural gas contracts
Other long-term liabilities
0.1
1.1
Total derivatives designated as hedging instruments
6.0
14.2
Total liability derivatives
$
6.0 $
14.2
Assuming market prices remain constant with those at December 29, 2024, a pre-tax loss of $4.9 million is expected to be
recognized over the next 12 months.
For derivative financial instruments that are designated as cash flow hedges, the gain or loss on the derivative is reported as a
component of other comprehensive income (OCI) and reclassified into earnings in the same period or periods during which the
hedged item affects earnings. For derivative financial instruments that are designated as fair value hedges, changes in the fair
value of these derivatives are recognized in current period results. There were no outstanding fair value hedges as of December
29, 2024 or December 31, 2023. The cash flow impact for all derivative financial instruments is reported in cash flows
provided by operating activities on the consolidated statement of cash flows. The Company did not use net investment hedges
for the periods presented. The effects of derivative instruments in the tables below are presented net of related income taxes,
excluding any impacts of changes to income tax valuation allowances affecting results of operations or other comprehensive
income, when applicable.
F-66
Activity with regard to derivatives designated as cash flow hedges for the fiscal years ended December 29, 2024 and December
31, 2023 were as follows (in millions):
Derivatives in Cash Flow
Hedging Relationships
Amount of Gain (Loss)
Recognized in OCI on
Derivatives
Amount of Gain (Loss)
Reclassified from
Accumulated OCI
into Income (a)
Fiscal Year
2024
2023
2024
2023
Nickel and other raw material contracts
$
(3.7) $
(11.0) $
(3.7) $
2.5
Natural gas contracts
(1.1)
(11.3)
(6.1)
(5.7)
Foreign exchange contracts
0.3
0.2
0.2
0.2
Interest rate swap
—
0.3
1.2
1.1
Total
$
(4.5) $
(21.8) $
(8.4) $
(1.9)
(a)
The gains (losses) reclassified from accumulated OCI into income related to the derivatives, with the exception of the
interest rate swap, are presented in sales and cost of sales in the same period or periods in which the hedged item affects
earnings. The gains (losses) reclassified from accumulated OCI into income on the interest rate swap are presented in
interest expense in the same period as the interest expense on the ABL Term Loan is recognized in earnings.
The disclosures of gains or losses presented above for nickel and other raw material contracts and foreign currency contracts do
not take into account the anticipated underlying transactions. Since these derivative contracts represent hedges, the net effect of
any gain or loss on results of operations may be fully or partially offset.
The Company may also use derivative instruments that are not designated as hedges to protect the Company’s results from
certain fluctuations in foreign exchange rates, as well as to offset a portion of the foreign currency gains and losses generated by
the remeasurement of certain assets and liabilities denominated in non-functional currencies. Changes in the fair value of these
foreign exchange contract derivatives not designated as hedging instruments are recorded in cost of sales or selling, general and
administrative expenses on the consolidated statement of operations, and the Company recognized $2.2 million of expense, net,
for settled foreign currency forward contracts that were not designated as hedges during the fiscal year ended December 29,
2024, which offset foreign currency gains/losses in the relevant currency. We have no significant outstanding hedges that are
not designated as of December 29, 2024.
Note 13. Fair Value of Financial Instruments
The estimated fair value of financial instruments at December 29, 2024 was as follows:
Fair Value Measurements at Reporting Date Using
(In millions)
Total
Carrying
Amount
Total
Estimated
Fair Value
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Cash and cash equivalents
$
721.2 $
721.2 $
721.2 $
—
Derivative financial instruments:
Assets
1.9
1.9
—
1.9
Liabilities
6.0
6.0
—
6.0
Debt (a)
1,909.5
1,889.7
1,580.2
309.5
F-67
The estimated fair value of financial instruments at December 31, 2023 was as follows:
Fair Value Measurements at Reporting Date Using
(In millions)
Total
Carrying
Amount
Total
Estimated
Fair Value
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Cash and cash equivalents
$
743.9 $
743.9 $
743.9 $
—
Derivative financial instruments:
Assets
0.9
0.9
—
0.9
Liabilities
14.2
14.2
—
14.2
Debt (a)
2,199.2
2,746.7
2,438.9
307.8
(a)
The total carrying amount for debt excludes debt issuance costs related to the recognized debt liability which is presented
in the consolidated balance sheets as a direct reduction from the carrying amount of the debt liability.
In accordance with accounting standards, fair value is defined as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants at the measurement date. Accounting standards established three levels of a fair value
hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of
observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as
follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and
liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or
other inputs that are observable or can be corroborated by observable market data.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value
of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar
techniques that use significant unobservable inputs.
The availability of observable market data is monitored to assess the appropriate classification of financial instruments within
the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of
financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the
reporting period.
The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:
Cash and cash equivalents: Fair values were determined using Level 1 information.
Derivative financial instruments: Fair values for derivatives were measured using exchange-traded prices for the hedged items.
The fair value was determined using Level 2 information, including consideration of counterparty risk and the Company’s
credit risk.
Short-term and long-term debt: The fair values of the 2025 Convertible Notes (prior to conversion in the third quarter of fiscal
year 2024), the Allegheny Ludlum 6.95% Debentures due 2025, the 5.875% Senior Notes due 2027, the 4.875% Senior Notes
due 2029, the 2030 Notes and the 5.125% Senior Notes due 2031 were determined using Level 1 information. The fair values
of other short-term and long-term debt were determined using Level 2 information.
Note 14. Retirement Benefits
The Company has defined contribution retirement plans or defined benefit pension plans covering substantially all employees.
Company contributions to defined contribution retirement plans are generally based on a percentage of eligible pay or based on
hours worked. Benefits under the defined benefit pension plans are generally based on years of service and/or final average
pay. The Company also sponsors several postretirement plans covering certain collectively-bargained salaried and hourly
employees. The plans provide health care and life insurance benefits for eligible retirees. In most retiree health care plans,
Company contributions towards premiums are capped based on the cost as of a certain date, thereby creating a defined
contribution.
F-68
ATI instituted several initiatives over a multi-year period as part of its retirement benefit liability derisking strategy. Future
benefit accruals for all participants in the U.S. defined benefit pension plans other than those subject to a CBA were frozen at
the end of fiscal year 2014, and subsequently CBAs were negotiated to close these plans to new entrants. As a result of these
actions, the Company has completely closed all defined benefit pension plans to new entrants, and has substantially limited the
number of employees still accruing benefit service to less than 800 participants. Additionally, all of ATI’s remaining
collectively-bargained, capped defined benefit retiree health care plans are closed to new entrants. These liability management
actions have transitioned ATI’s retirement benefit and other postretirement benefit programs largely to a defined contribution
structure. From fiscal years 2013 to 2022, five annuity buyouts of retired participants and two voluntary cash out programs of
deferred participants during this period helped to reduce the total participants in ATI’s U.S. qualified defined benefit pension
plans by more than 60%. During the fourth quarter of fiscal year 2023, the Company purchased group annuity contracts from
an insurer covering approximately 85% of the Company’s U.S. qualified defined benefit pension plan obligations. Under these
contracts, the Company transferred the pension obligations and associated assets for approximately 8,200 plan participants to
the selected insurance company. To facilitate this pension derisking strategy, the Company completed a voluntary cash out for
term vested employees and contributed $222 million to its pension plan in the third quarter of fiscal year 2023, to fully fund
remaining pension liabilities ahead of this annuity transaction. After these actions, the Company’s U.S. qualified defined
benefit pension plan includes approximately 2,000 participants.
Costs for defined contribution retirement plans were $42.5 million in fiscal year 2024, $38.8 million in fiscal year 2023, and
$31.1 million in fiscal year 2022. Company contributions to these defined contribution plans are funded with cash. In fiscal
year 2022, the Company implemented certain plan design changes to the ATI 401(k) Savings Plan which decreased the
qualified non-elective contribution percentage and increased the Company match contribution percentage. Other postretirement
benefit costs for a defined contribution plan under the terms of a CBA were $1.0 million for each of the fiscal years ended
December 29, 2024, December 31, 2023, and January 1, 2023.
The components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the
following:
Pension Benefits
Other Postretirement Benefits
Fiscal Year
(In millions)
2024
2023
2022
2024
2023
2022
Service cost—benefits earned during the year
$
5.8 $
6.0 $
11.9 $
0.5 $
0.6 $
1.1
Interest cost on benefits earned in prior years
16.4
79.7
69.7
10.2
10.9
7.7
Expected return on plan assets
(16.4)
(84.8)
(128.2)
—
—
—
Amortization of prior service cost (credit)
0.3
0.3
0.4
(0.8)
(0.9)
(0.9)
Amortization of net actuarial loss
—
—
—
5.2
6.0
13.2
Recognized actuarial loss (gain)- mark to
market
14.1
26.8
(100.3)
—
—
—
Settlement loss
—
41.7
0.7
—
—
—
Total retirement benefit expense (income)
$
20.2 $
69.7 $ (145.8) $
15.1 $
16.6 $
21.1
Under the Company’s accounting method for recognizing actuarial gains and losses for its defined benefit pension plans,
remeasurement of projected benefit obligation and plan assets for defined benefit pension plans are immediately recognized in
earnings through net periodic pension benefit cost from remeasurements annually in the fourth quarter and on an interim basis
due to triggering events that require remeasurement. This resulted in actuarial losses of $14.1 million and $26.8 million in
fiscal years 2024 and 2023, respectively, and an actuarial gain of $100.3 million in fiscal year 2022, within nonoperating
retirement benefit income/expense on the consolidated statements of operations.
On October 17, 2023, the Company completed a voluntary cash out for term vested employees and a large annuity buyout
related to approximately 8,200 U.S. qualified defined benefit pension plan participants. As a result of the annuity buyout, ATI
recognized a $41.7 million pretax settlement loss, which is recorded in nonoperating retirement benefit income/expense on the
consolidated statement of operations.
On May 12, 2022, the Company completed the sale of its Sheffield, U.K. operations (see Note 6). As a result of this sale, ATI
recognized a $0.7 million settlement loss, which is recorded in loss on asset sales and sales of businesses, net, on the
consolidated statement of operations, related to the amount in accumulated other comprehensive loss for the U.K. defined
benefit pension plan that transferred as part of the sale. Pension liabilities and assets for this U.K. defined benefit pension plan
that were removed as a result of this divestiture are included below in the tables of changes in benefit obligations and changes
in plan assets, respectively.
F-69
Actuarial assumptions used to develop the components of defined benefit pension expense and other postretirement benefit
expense were as follows:
Pension Benefits
Other Postretirement Benefits
Fiscal Year
2024
2023
2022
2024
2023
2022
Discount rate (a)
5.60 %
5.55%- 6.40%
2.95 %
5.40 %
5.45 %
2.80 %
Rate of increase in future
compensation levels
3.00 %
3.00 %
2.00%- 3.00%
—
—
—
Weighted average expected
long-term rate of return on
assets (a)
5.80 %
5.80%-6.57%
6.43 %
— %
— %
— %
(a) Pension expense for fiscal year 2023 was initially measured at a 5.55% discount rate and 6.57% weighted average expected
long-term rate of return on assets. The U.S. qualified pension plans were remeasured using a 6.40% weighted average discount
rate and 5.80% weighted average expected long-term rate of return on assets as of October 17, 2023, following the large
annuity buyout of retirees.
Actuarial assumptions used for the valuation of defined benefit pension and other postretirement benefit obligations at the end
of the respective periods were as follows:
Pension Benefits
Other Postretirement Benefits
Fiscal Year
2024
2023
2024
2023
Discount rate
5.85 %
5.60 %
5.60 %
5.40 %
Rate of increase in future compensation levels
3.00%- 5.00%
3.00 %
—
—
A reconciliation of the funded status for the Company’s defined benefit pension and other postretirement benefit plans at
December 29, 2024 and December 31, 2023 was as follows:
Pension Benefits
Other Postretirement Benefits
Fiscal Year
(In millions)
2024
2023
2024
2023
Change in benefit obligations:
Benefit obligation at beginning of fiscal year
$
298.4 $
1,818.3 $
201.6 $
212.7
Service cost
5.8
6.0
0.5
0.6
Interest cost
16.4
79.7
10.2
10.9
Benefits paid
(3.5)
(153.9)
(25.4)
(26.4)
Net actuarial (gains) losses – discount rate change
(9.7)
(95.8)
(2.5)
0.7
– other
(1.8)
(5.3)
4.8
3.1
Plan settlement
—
(1,350.6)
—
—
Benefit obligation at end of fiscal year
$
305.6 $
298.4 $
189.2 $
201.6
Actuarial effects of changes in discount rates are separately identified in the preceding table.
Pension Benefits
Other Postretirement Benefits
Fiscal Year
(In millions)
2024
2023
2024
2023
Change in plan assets:
Fair value of plan assets at beginning of fiscal year
$
289.1 $
1,599.5 $
— $
—
Actual returns on plan assets and plan expenses
(9.1)
(83.9)
—
—
Employer contributions
3.3
278.0
—
—
Plan settlement
—
(1,350.6)
—
—
Benefits paid
(3.5)
(153.9)
—
—
Fair value of plan assets at end of fiscal year
$
279.8 $
289.1 $
— $
—
F-70
On October 17, 2023, the Company completed a voluntary cash out for term vested employees and a large annuity buyout
related to approximately 8,200 U.S. qualified defined benefit pension plan participants. These actions resulted in a reduction in
the benefit obligations and plan assets of $1.4 billion.
Assets (liabilities) recognized in the consolidated balance sheets:
Pension Benefits
Other Postretirement Benefits
Fiscal Year
2024
2023
2024
2023
Current assets
$
— $
2.4 $
— $
—
Noncurrent assets
16.6
33.6
—
—
Current liabilities
(5.2)
(5.6)
(24.9)
(26.4)
Noncurrent liabilities
(37.2)
(39.7)
(164.3)
(175.2)
Total amount recognized
$
(25.8) $
(9.3) $
(189.2) $
(201.6)
Changes to accumulated other comprehensive loss related to pension and other postretirement benefit plans in fiscal years 2024
and 2023 were as follows:
Pension Benefits
Other Postretirement Benefits
Fiscal Year
(In millions)
2024
2023
2024
2023
Beginning of year accumulated other comprehensive loss
$
(7.4) $
(8.8) $
(54.5) $
(55.8)
Amortization of net actuarial loss
—
—
5.2
6.0
Amortization of prior service cost (credit)
0.3
0.3
(0.8)
(0.9)
Settlement loss
—
1.1
—
—
Remeasurements
—
—
(2.2)
(3.8)
End of year accumulated other comprehensive loss
$
(7.1) $
(7.4) $
(52.3) $
(54.5)
Net change in accumulated other comprehensive loss
$
0.3 $
1.4 $
2.2 $
1.3
Amounts included in accumulated other comprehensive loss at December 29, 2024 and December 31, 2023 were as follows:
Pension Benefits
Other Postretirement Benefits
Fiscal Year
(In millions)
2024
2023
2024
2023
Prior service (cost) credit
$
(7.1) $
(7.4) $
0.8 $
1.7
Net actuarial loss
—
—
(53.1)
(56.2)
Accumulated other comprehensive loss
(7.1)
(7.4)
(52.3)
(54.5)
Deferred tax effect
1.9
1.9
27.0
27.5
Accumulated other comprehensive loss, net of tax
$
(5.2) $
(5.5) $
(25.3) $
(27.0)
Amounts in accumulated other comprehensive loss presented above do not include any effects of deferred tax asset valuation
allowances. See Note 15 for further discussion on deferred tax asset valuation allowances.
Retirement benefit expense for fiscal year 2025 for defined benefit plans is estimated to be approximately $22 million,
comprised of $7 million for pension expense and $15 million of expense for other postretirement benefits. For other
postretirement benefits, the net actuarial loss is recognized in the consolidated statement of operations using a corridor method.
For both pension and other postretirement benefits, prior service cost (credit) amortization is recognized in level amounts over
the expected service of the active membership as of the amendment effective date. Amounts in accumulated other
comprehensive loss that are expected to be recognized as components of net periodic benefit cost in fiscal year 2025 are:
(In millions)
Pension
Benefits
Other
Postretirement
Benefits
Total
Amortization of prior service cost (credit)
$
0.4 $
(0.9) $
(0.5)
Amortization of net actuarial loss
—
5.1
5.1
Amortization of accumulated other comprehensive loss
$
0.4 $
4.2 $
4.6
F-71
The accumulated benefit obligation for all defined benefit pension plans was $292.3 million and $281.3 million at December
29, 2024 and December 31, 2023, respectively. Additional information for pension plans with accumulated benefit obligations
and projected benefit obligations in excess of plan assets:
Pension Benefits
Fiscal Year
(In millions)
2024
2023
Projected benefit obligation
$
42.4 $
45.3
Accumulated benefit obligation
$
42.4 $
45.3
Fair value of plan assets
$
— $
—
Cash contributions to ATI’s U.S. qualified defined benefit pension plans were $272 million in fiscal year 2023 and $50 million
in fiscal year 2022. There were no cash contributions in fiscal year 2024. The Company funds the U.S. defined benefit pension
plans in accordance with the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code.
The Company has no required cash contributions to its U.S. qualified defined benefit pension plan in fiscal year 2025. In
addition, for fiscal year 2025, the Company expects approximately $5 million of payments for U.S. nonqualified pension
benefits.
The following table summarizes expected benefit payments from the Company’s various pension and other postretirement
defined benefit plans through fiscal year 2034, and also includes estimated Medicare Part D subsidies projected to be received
during this period based on currently available information. Pension benefit payments for the U.S. qualified defined benefit
pension plan are made from pension plan assets.
(In millions)
Fiscal Year
Pension
Benefits
Other
Postretirement
Benefits
Medicare Part
D Subsidy
2025
$
14.4 $
24.9 $
—
2026
15.5
22.7
—
2027
16.9
21.3
—
2028
17.9
19.9
—
2029
18.4
18.5
—
2030-2034
103.7
71.3
—
The annual assumed rate of increase in the per capita cost of covered benefits (the health care cost trend rate) for health care
plans was 6.6% in 2025 and is assumed to gradually decrease to 4.0% in the year 2048 and remain at that level thereafter.
Assumed health care cost trend rates can have a significant effect on the amounts reported for the health care plans, however,
the Company’s contributions for most of its retiree health plans are capped based on a fixed premium amount, which limits the
impact of future health care cost increases.
The fair values of the Company’s pension plan assets are determined using net asset value (NAV) as a practical expedient, or by
information categorized in the fair value hierarchy level based on the inputs used to determine fair value, as further discussed in
Note 13. The fair values at December 29, 2024 were as follows:
(In millions)
Quoted Prices in
Active Markets for
Identical Assets
Significant
Observable Inputs
Significant
Unobservable
Inputs
Asset category
Total
NAV
(Level 1)
(Level 2)
(Level 3)
Equity securities:
U.S. equities
$
0.1 $
—
$
0.1 $
— $
—
Fixed income and cash equivalents
199.2
5.3
193.9
—
—
Private equity
60.8
60.8
—
—
—
Alternative investments- hedge funds,
real estate and other
19.7
19.7
—
—
—
Total assets
$
279.8 $
85.8
$
194.0 $
— $
—
F-72
The fair values of the Company’s pension plan assets at December 31, 2023 were as follows:
(In millions)
Quoted Prices in
Active Markets for
Identical Assets
Significant
Observable Inputs
Significant
Unobservable
Inputs
Asset category
Total
NAV
(Level 1)
(Level 2)
(Level 3)
Equity securities:
U.S. equities
$
0.1 $
— $
0.1 $
— $
—
International equities
0.1
—
0.1
—
—
Fixed income and cash equivalents
130.3
8.3
122.0
—
—
Private equity
60.8
60.8
—
—
—
Alternative investments- hedge funds,
real estate and other
97.8
97.8
—
—
—
Total assets
$
289.1 $
166.9 $
122.2 $
— $
—
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant
to the fair value measurement. Investments in U.S. and International equities, and Fixed Income are predominantly held in
common/collective trust funds and registered investment companies. Some of these investments are publicly traded securities
and are classified as Level 1, while others are public investment vehicles valued using the NAV provided by the administrator
of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided
by the number of shares outstanding. These investments are not classified in the fair value hierarchy.
Private equity investments include both Direct Funds and Fund-of-Funds. Direct Funds are investments in Limited Partnership
(LP) interests. Fund-of-Funds are investments in private equity funds that invest in other private equity funds or LPs. Fair
value of these investments is determined utilizing net asset values, and are not classified in the fair value hierarchy.
Alternative investments include hedge fund and real estate investments that are made as a limited partner in funds managed by a
general partner. Fair value of these investments is determined utilizing net asset values, and are not classified in the fair value
hierarchy.
For certain investments which have formal financial valuations reported on a one-quarter lag, fair value is determined utilizing
net asset values adjusted for subsequent cash flows and other significant events.
For fiscal year 2025, the expected long-term rate of return on defined benefit pension assets is 5.80%. In developing expected
long-term rate of return assumptions, the Company evaluated input from its third party pension plan asset managers and
actuaries, including reviews of their asset class return expectations and long-term inflation assumptions. An expected long-term
rate of return is based on expected asset allocations within ranges for each investment category and projected annual compound
returns. The Company’s actual, weighted average returns on pension assets for the last five fiscal years have been (2.7)% for
2024, 2.0% for 2023, (14.5)% for 2022, 12.4% for 2021, and 15.2% for 2020.
The ATI Pension Plan (the Plan), the Company’s remaining U.S. qualified defined benefit pension plan, continues to invest in a
diversified portfolio consisting of an array of asset classes that attempts to maintain the Plan’s funded status while maximizing
returns and minimizing volatility. These asset classes may include U.S. domestic equities, non-U.S. developed market equities,
emerging market equities, hedge funds, private equity, traditional fixed income consisting of long government/credit and
alternative credit, and real estate. The Company continually monitors the investment results of these asset classes and its fund
managers, and explores other potential asset classes for possible future investment.
The ability to redeem investments at year-end are based on the type of investment and the agreements with fund managers.
Generally, the Company’s fixed income and equity investments are readily redeemable with limited restrictions. The ability to
redeem investments in hedge funds can vary significantly. Managers may require longer notice periods and may limit the
amount able to be redeemed in a period (e.g., month or quarter) to a percent of the overall investment. Investments in private
equity are not redeemable at ATI’s option. Distributions are based on the sale of the underlying investments in the fund,
subject to the terms in each fund agreement.
F-73
The target asset allocations for ATI Pension Plan for fiscal year 2025, by major investment category, are:
Asset category
Target asset allocation range
Equities
0% - 20%
Fixed income and cash equivalents
50% - 100%
Private equity and other
0% - 40%
As of December 29, 2024, the Company’s pension plan had outstanding commitments to invest up to $37 million in private
equity investments. These commitments are expected to be satisfied through the reallocation of pension trust assets while
maintaining investments within the target asset allocation ranges.
The Company contributes to several multiemployer defined benefit pension plans under collective bargaining agreements that
cover certain of its union-represented employees. The risks of participating in such plans are different from the risks of single-
employer plans, in the following respects:
a.
Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other
participating employers.
b.
If a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the
remaining participating employers.
c.
If the Company ceases to have an obligation to contribute to the multiemployer plan in which it had been a contributing
employer, it may be required to pay to the plan an amount based on the underfunded status of the plan and on the history
of the Company’s participation in the plan prior to the cessation of its obligation to contribute. The amount that an
employer that has ceased to have an obligation to contribute to a multiemployer plan is required to pay to the plan is
referred to as a withdrawal liability.
The Company’s participation in multiemployer plans for the fiscal years ended December 29, 2024, December 31, 2023 and
January 1, 2023 is reported in the following table.
Pension
Protection Act
Zone Status (1)
FIP / RP Status
Pending /
Implemented (2)
in millions
Expiration Dates
of Collective
Bargaining
Agreements
EIN / Pension
Plan Number
Company Contributions
Surcharge
Imposed (3)
Fiscal Year
Fiscal Year
Pension Fund
2024
2023
2024
2023
2022
Steelworkers
Western
Independent Shops
Pension Plan
90-0169564
/ 001
Green
Green
N/A
$
1.1
$
0.7
$
0.1
No
2/28/2025
Boilermakers-
Blacksmiths
National Pension
Trust
48-6168020
/ 001
Red
Red
Yes
2.7
2.6
2.3
No
9/30/2026
IAM National
Pension Fund
51-6031295
/ 002
Red
Red
Yes
2.1
1.9
1.9
Yes
Various between
2025-2028 (4)
Total
contributions
$
5.9
$
5.2
$
4.3
(1)
The most recent Pension Protection Act Zone Status is based on information provided to ATI and other participating
employers by each plan, as certified by the plan’s actuary. A plan in the “deep red” zone had been determined to be in
“critical and declining status”, based on criteria established by the Internal Revenue Code (Code), and is in critical status
(as defined by the “red” zone) and is projected to become insolvent (run out of money to pay benefits) within 15 years
(or within 20 years if a special rule applies). A plan in the “red” zone had been determined to be in “critical status”,
based on criteria established by the Code, and is generally less than 65% funded. A plan in the “yellow” zone has been
determined to be in “endangered status”, based on criteria established under the Code, and is generally less than 80%
funded. A plan in the “green” zone has been determined to be neither in “critical status” nor in “endangered status”, and
is generally at least 80% funded. Additionally, a plan may voluntarily place itself into a rehabilitation plan.
In April 2019, the Company received notification from the IAM National Pension Fund (IAM Fund) that its’ actuary
certified the IAM Fund as “endangered status” for the plan year beginning January 1, 2019, and that the IAM Fund was
voluntarily placing itself in “red” zone status and implementing a rehabilitation plan. Annually in April of each year
F-74
from 2020 through 2024, the Company received notification from the IAM Fund that it was certified by its actuary as
being in “red” zone status for each of these plan years from January 1, 2020 through December 31, 2024. A contribution
surcharge was imposed as of June 1, 2019 in addition to the contribution rate specified in the applicable collective
bargaining agreements. The contribution surcharge remains in effect, and ends when an employer begins contributing
under a collective bargaining agreement that includes terms consistent with the rehabilitation plan.
In April 2019, the Company received notifications from the Boilermakers-Blacksmiths National Pension Trust
(Blacksmiths Trust) that it was certified by its actuary as being in “red” zone status for the plan year beginning January
1, 2019. A rehabilitation plan was adopted for the Blacksmiths Trust, and the Company and the Blacksmiths union
agreed to adopt the rehabilitation plan in 2019 prior to a contribution surcharge being imposed. In April 2020 and 2021,
the funding status improved for the Blacksmiths Trust as it was certified by its actuary as being in the “yellow” zone for
the plan years beginning January 1, 2020 and 2021. In April 2022, the funding status further improved to being in the
“green” zone for the plan year beginning January 1, 2022. In April 2023, the Blacksmiths Trust was certified by its
actuary as being in “red” zone status for the plan years beginning January 1, 2023, and in April 2024, the Blacksmiths
Trust was certified by its actuary as being in “red” zone status for the plan years ending December 31, 2023. A
rehabilitation plan has been adopted for the Blacksmiths Trust, and the Company and the Blacksmiths union agreed to
adopt the rehabilitation plan in 2023 prior to a contribution surcharge being imposed.
(2)
The “FIP / RP Status Pending / Implemented” column indicates whether a Funding Improvement Plan, as required under
the Code by plans in the “yellow” zone, or a Rehabilitation Plan, as required under the Code to be adopted by plans in
the “red” or “deep red” zones, is pending or has been implemented as of the end of the plan year that ended in 2024.
(3)
The “Surcharge Imposed” column indicates whether ATI’s contribution rate for 2024 included an amount in addition to
the contribution rate specified in the applicable collective bargaining agreement, as imposed by a plan in “critical status”
or “critical and declining status”, in accordance with the requirements of the Code.
(4)
The Company is party to five separate bargaining agreements that require contributions to this plan. Expiration dates of
these collective bargaining agreements range between March 27, 2025 and July 14, 2028.
F-75
Note 15. Accumulated Other Comprehensive Income (Loss)
The changes in AOCI by component, net of tax, for the fiscal years ended December 29, 2024, December 31, 2023 and January
1, 2023 were as follows (in millions):
Post-
retirement
benefit plans
Currency
translation
adjustment
Derivatives
Deferred Tax
Asset
Valuation
Allowance
Revised
Total
Balance, January 2, 2022
$
(86.6) $
(64.9) $
5.1 $
5.1 $
(141.3)
OCI before reclassifications
41.3
(25.2)
41.0
—
57.1
Amounts reclassified from AOCI
(a)
10.6 (c)
20.0
(d)
(32.6)
(e)
18.8
16.8
Net current-period OCI
51.9
(5.2)
8.4
18.8
73.9
Balance, January 1, 2023
(34.7)
(70.1)
13.5
23.9
(67.4)
OCI before reclassifications
(2.9)
1.7
(21.8)
—
(23.0)
Amounts reclassified from AOCI
(a)
5.1 (b)
—
(d)
1.9
(e)
0.2
7.2
Net current-period OCI
2.2
1.7
(19.9)
0.2
(15.8)
Balance, December 31, 2023
(32.5)
(68.4)
(6.4)
24.1
(83.2)
OCI before reclassifications
(1.6)
(11.4)
(4.5)
—
(17.5)
Amounts reclassified from AOCI
(a)
3.6 (b)
—
(d)
8.4
(e)
(0.8)
11.2
Net current-period OCI
2.0
(11.4)
3.9
(0.8)
(6.3)
Balance, December 29, 2024
$
(30.5) $
(79.8) $
(2.5) $
23.3 $
(89.5)
Attributable to noncontrolling interests:
Balance, January 2, 2022
$
— $
26.0 $
— $
— $
26.0
OCI before reclassifications
—
(18.3)
—
—
(18.3)
Amounts reclassified from AOCI
— (b)
—
—
—
—
Net current-period OCI
—
(18.3)
—
—
(18.3)
Balance, January 1, 2023
—
7.7
—
—
7.7
OCI before reclassifications
—
(0.4)
—
—
(0.4)
Amounts reclassified from AOCI
— (b)
—
—
—
—
Net current-period OCI
—
(0.4)
—
—
(0.4)
Balance, December 31, 2023
—
7.3
—
—
7.3
OCI before reclassifications
—
(1.6)
—
—
(1.6)
Amounts reclassified from AOCI
— (b)
—
—
—
—
Net current-period OCI
—
(1.6)
—
—
(1.6)
Balance, December 29, 2024
$
— $
5.7 $
— $
— $
5.7
(a)
Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 14)
and/or loss on asset sales and sales of businesses, net, as part of the loss on sale of the Sheffield, U.K. operations (see
Note 6).
(b)
No amounts were reclassified to earnings.
(c)
Amounts were included in loss on asset sales and sales of businesses, net, as part of the loss on sale of the Sheffield,
U.K. operations (see Note 6).
(d)
Amounts related to derivatives are included in sales, cost of goods sold or interest expense in the period or periods the
hedged item affects earnings (see Note 12).
(e)
Represents the net change in deferred tax asset valuation allowances on changes in AOCI balances between the balance
sheet dates. The income tax provision for the fiscal year ended December 29, 2024 includes $0.8 million of a tax
benefit for the recognition of a stranded deferred tax valuation allowance that was associated with the Company’s
interest rate swap due to its maturity.
F-76
Other comprehensive income (loss) amounts (OCI) reported above by category are net of applicable income tax expense
(benefit) for each year presented. Income tax expense (benefit) on OCI items is recorded as a change in a deferred tax asset or
liability. Amounts recognized in OCI include the impact of any deferred tax asset valuation allowances, when applicable.
Foreign currency translation adjustments, including those pertaining to noncontrolling interests, are generally not adjusted for
income taxes as they relate to indefinite investments in non-U.S. subsidiaries.
Reclassifications out of AOCI for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023 were as
follows:
Amount reclassified from AOCI (d)
Fiscal year ended
Details about AOCI Components
(In millions)
December 29, 2024
December 31, 2023
January 1, 2023
Affected line item in the
consolidated statement
of operations
Postretirement benefit plans
Revised
Prior service credit
$
0.5 (a)
$
0.6 (a)
$
0.5 (a)
Actuarial losses
(5.2) (a)
(6.0) (a)
(13.2) (a)
Settlement loss
— (a)
(1.1) (a)
(0.7) (b)
(4.7) (d)
(6.5) (d)
(13.4) (d)
Total before tax
(1.1)
(1.4)
(2.8)
Tax benefit (e)
$
(3.6)
$
(5.1)
$
(10.6)
Net of tax
Currency translation adjustment
— (d)
— (d)
(20.0) (b,d)
Derivatives
Nickel and other raw
material contracts
$
(4.8) (c)
$
3.3 (c)
$
26.9 (c)
Natural gas contracts
(8.0) (c)
(7.5) (c)
15.1 (c)
Foreign exchange contracts
0.2 (c)
0.3 (c)
0.9 (c)
Interest rate swap
1.6 (c)
1.4 (c)
(0.1) (c)
(11.0) (d)
(2.5) (d)
42.8 (d)
Total before tax
(2.6)
(0.6)
10.2
Tax provision
(benefit) (e)
$
(8.4)
$
(1.9)
$
32.6
Net of tax
(a)
Amounts are included in nonoperating retirement benefit expense (see Note 14).
(b)
Amounts in 2022 were included in loss on asset sales and sales of businesses, net, as part of the loss on sale of the
Sheffield, U.K. operations (see Note 6).
(c)
Amounts related to derivatives, with the exception of the interest rate swap, are included in sales or cost of goods sold
in the period or periods the hedged item affects earnings. Amounts related to the interest rate swap are included in
interest expense in the same period as the interest expense on the ABL Term Loan is recognized in earnings (see Note
12).
(d)
For pretax items, positive amounts are income and negative amounts are expense in terms of the impact to net income.
Tax effects are presented in conformity with ATI’s presentation in the consolidated statements of operations.
(e)
These amounts exclude the impact of any deferred tax asset valuation allowances, when applicable, including
recognition of stranded balances (see Note 17 for further explanation).
F-77
Note 16. Stockholders’ Equity
Preferred Stock
Authorized preferred stock may be issued in one or more series, with designations, powers and preferences as shall be
designated by the Board of Directors. At December 29, 2024, there were no shares of preferred stock issued.
Dividends
Under the ABL credit facility, there is no limit on dividend declarations or payments provided that the undrawn availability,
after giving effect to a particular dividend payment, is at least the greater of $120 million and 20% of the total facility size, after
giving effect to any repayment of term loans, and no event of default under the ABL credit facility has occurred and is
continuing or would result from paying the dividend. In addition, there is no limit on dividend declarations or payments if the
undrawn availability is less than the greater of $120 million and 20% of the total facility size, after giving effect to any
repayment of term loans, but more than the greater of $75 million and 12.5% of the total facility size, after giving effect to any
repayment of term loans, if (i) no event of default has occurred and is continuing or would result from paying the dividend, (ii)
the Company demonstrates to the administrative agent that, prior to and after giving effect to the payment of the dividend (A)
the undrawn availability, as measured both at the time of the dividend payment and as an average for the 60 consecutive day
period immediately preceding the dividend payment, is at least the greater of $75 million and 12.5% of the total facility size,
after giving effect to any repayment of term loans, and (B) the Company maintains a fixed charge coverage ratio of at least
1.00:1.00, as calculated in accordance with the terms of the ABL credit facility.
Share-based Compensation
In May 2022, the Company’s stockholders approved the ATI Inc. 2022 Incentive Plan (the “2022 Incentive Plan”). Following
adoption, all new share-based compensation awards are being made under the 2022 Incentive Plan. Shares previously
remaining available for grant under prior incentive plans, or which become available for award due to the forfeiture or
cancellation of prior awards under those prior plans, are available for award under the 2022 Incentive Plan. Outstanding grants
previously made under prior incentive plans remain in effect in accordance with relevant terms.
Awards earned under the Company’s share-based incentive compensation programs are paid with shares held in treasury or
newly issued shares depending on the level of treasury shares held. At December 29, 2024, 5.6 million shares of common stock
were available for future awards under the 2022 Incentive Plan. The general terms of each arrangement granted under the 2022
Incentive Plan, and predecessor plans, the method of estimating fair value for each arrangement, and award activity is reported
below.
The Company’s share-based incentive compensation program consists of both service-based and performance/market-based
awards. These awards convey participants the right to receive shares of ATI common stock if the service conditions, and
performance or market requirements, of the awards are attained.
Service-based awards:
Restricted share units (RSUs) are rights to receive shares of Company stock when the award vests. The RSUs generally vest
over three years based on employment service, with one-third of the award vesting on each of the first, second and third
anniversaries of the grant date. RSU awards to non-employee directors vest in one year. No dividends are accumulated or paid
on the RSUs. The fair value of the RSU award is measured based on the stock price at the grant date.
F-78
Compensation expense related to RSU awards was $16.3 million in fiscal year 2024, $14.5 million in fiscal year 2023, and
$13.4 million in fiscal year 2022. Approximately $10.8 million of unrecognized fair value compensation expense relating to
restricted stock units is expected to be recognized through fiscal year 2027, with $7.5 million expected to be recognized in
fiscal year 2025, including estimates of service period forfeitures. Activity under the Company’s RSU awards for the fiscal
years ended December 29, 2024, December 31, 2023, and January 1, 2023 was as follows:
Fiscal Year
(Shares in thousands, $ in millions)
2024
2023
2022
Number of
shares/units
Weighted
Average
Grant Date
Fair Value
Number of
shares/units
Weighted
Average Grant
Date Fair
Value
Number of
shares
Weighted
Average Grant
Date Fair
Value
Nonvested, beginning of fiscal year
1,220 $
28.0
1,479 $
26.0
1,409 $
25.6
Granted
465
21.8
512
16.0
831
14.8
Vested
(717)
(15.3)
(729)
(13.1)
(634)
(12.3)
Forfeited
(107)
(3.5)
(42)
(0.9)
(127)
(2.1)
Nonvested, end of fiscal year
861 $
31.0
1,220 $
28.0
1,479 $
26.0
Performance condition awards:
The Company awarded performance share units (PSUs) with performance requirements through fiscal year 2020. These PSU
award opportunities, the last of which vested at the conclusion of its applicable three-year performance period on January 1,
2023, were determined at a target number of units, and the number of shares awarded was based on attainment of two ATI
financial performance metrics. PSU awards through fiscal year 2020 are accounted for as performance condition plans with
service vesting requirements, with compensation expense during the performance period recognized based on estimates of
attaining the performance criteria, including estimated forfeitures. The metrics for PSU awards granted in fiscal year 2020
measured (1) net income attributable to ATI and (2) return on capital employed, over a three-year performance period with a
threshold attainment of 25% and a maximum attainment of 200% of the target financial performance metrics and target share
units, measured over the applicable three-year performance period. For certain senior executives, the number of PSUs to be
awarded based on the performance criteria was modified up or down by up to 20% based on the Company’s relative total
shareholder return (TSR) over the performance measurement period (“TSR Modifier”), but not above the maximum number of
PSUs to be vested. The TSR Modifier measured the return of the Company’s stock price (including assumed dividend
reinvestment, if any) at the end of the performance period as compared to the stock prices (including assumed dividend
reinvestment, if any) of a group of industry peers. The fair value of the PSU award was measured based on the stock price at
the grant date, including the effect of the TSR Modifier. The fair value of the TSR Modifier was determined by using Monte
Carlo simulations of stock price correlation, projected dividend yields and other variables over a three-year time horizon
matching the TSR performance measurement period. Expense recognition varied with the level of performance achieved.
Market condition awards:
The Company awarded PSUs with market requirements in fiscal years 2021, 2022, 2023 and 2024. These PSU award
opportunities are determined at a target number of share units, and the number of shares awarded is based on TSR, representing
the measured return of the Company’s stock price (including assumed dividend reinvestment, if any) at the end of the three year
period as compared to the stock prices (including assumed dividend reinvestment, if any) of a group of industry peers. The
fiscal year 2021, 2022, 2023 and 2024 PSU awards are accounted for as a market condition plan with service vesting
requirements, with expense recognized over the service period without regard to the level of TSR attainment or shares awarded.
The actual number of shares awarded at the end of the measurement period may range from a minimum of zero to a maximum
of two times target. For the fiscal year 2021 and 2022 awards, TSR is determined over eight distinct quarterly periods as
measured from January 1 of the grant year of the award through the end of each quarterly period starting with the first quarter
ending in the second year following the grant of the award. For the 2023 and 2024 awards, TSR is determined over four
distinct six-month periods as measured from January 1 of the grant year of the award through the end of each six-month period
starting with the second quarter ending in the second year following the grant of the award; earned payouts from each TSR
measurement period are averaged to determine the final payout at the conclusion of the three-year period. The fair value for
this award was determined by using Monte Carlo simulations of stock price correlation, projected dividend yields and other
variables over the three-year time horizon matching the TSR measurement period.
In fiscal year 2022, the Company awarded a new one-time grant of PSUs with market requirements, called the Breakout
Performance Award (BPA). In fiscal year 2024, 6,530 shares were issued due to retirement vesting. In fiscal year 2023, 46,046
additional share units under the fiscal year 2022 BPA were awarded to new members of senior management and 4,807 shares
F-79
were issued due to retirement vesting. The BPA has a target number of share units, and the number of shares awarded is based
on the absolute return on the Company’s stock during a four-year measurement period. The service vesting requirements of the
BPA award are four years for one half of the award and five years for the remaining half. The BPA award is accounted for as a
market condition plan with service vesting requirements, with expense recognized over the service periods without regard to the
level of absolute return attainment or shares awarded. The actual number of BPA shares awarded at the end of the
measurement period may range from a minimum of zero to a maximum of three times target. The fair value for this award was
determined by using Monte Carlo simulations of stock price correlation, projected dividend yields and other variables over the
four-year time horizon matching the BPA measurement period.
At December 29, 2024, a maximum of 3.9 million shares have been reserved for issuance for all PSU awards. The Company
recognized $17.8 million, $14.6 million and $12.6 million of compensation expense in fiscal years 2024, 2023 and 2022,
respectively, for all PSU awards. Forfeited share units in fiscal years 2024, 2023 and 2022 were 183,418, 19,863, and 159,298,
respectively, with a weighted average grant date fair value of $5.1 million, $0.5 million, and $3.4 million, respectively.
The fair value of each PSU award, the target share units awarded and projected future compensation expense to be recognized
for these awards, including actual and estimated forfeitures at December 29, 2024 was as follows:
(Shares in thousands, $ in millions)
PSU Award Performance Period
Award Fair Value
December 29, 2024
Unrecognized
Compensation Expense
Compensation Expense
Expected to be Recognized
in the next 12 months
Target Share Units
Fiscal Year 2022-2024
$
11.0
—
—
494
Fiscal Year 2023-2025
$
12.6
3.9
3.9
330
Fiscal Year 2024-2026
$
13.6
5.3
2.5
262
Fiscal Year 2022-2025 BPA
$
20.3
5.2
3.6
857
Total
$
14.4
$
10.0
In fiscal year 2024, the fiscal year 2022 PSU awards vested with TSR attainment of 200.0%, resulting in the issuance of
849,422 shares in the first quarter of fiscal year 2025. In fiscal year 2023, the fiscal year 2021 PSU awards vested with TSR
attainment of 198.5%, resulting in the issuance of 848,194 shares in the first quarter of fiscal year 2024. In fiscal year 2022, the
fiscal year 2020 PSU awards vested with financial performance attainment between threshold and target and at 0% for the TSR
Modifier, resulting in the issuance of 182,628 shares in the first quarter of fiscal year 2023.
Note 17. Income Taxes
Income (loss) before income taxes for the Company’s U.S. and non-U.S. operations was as follows:
Fiscal Year
(In millions)
2024
2023
2022
U.S.
$
421.1 $
258.2 $
394.3
Non-U.S.
65.0
37.0
(39.7)
Income before income taxes
$
486.1 $
295.2 $
354.6
F-80
The income tax provision (benefit) was as follows:
Fiscal Year
(In millions)
2024
2023
2022
Current:
Federal
$
(0.3) $
3.0 $
5.0
State
6.9
0.5
3.7
Foreign
7.0
7.8
10.0
Total
13.6
11.3
18.7
Deferred:
Federal
84.5
(96.1)
(3.3)
State
4.3
(42.5)
0.2
Foreign
1.0
(0.9)
(0.1)
Total
89.8
(139.5)
(3.2)
Income tax provision (benefit)
$
103.4 $
(128.2) $
15.5
The following is a reconciliation of income taxes computed at the statutory U.S. Federal income tax rate to the actual effective
income tax provision (benefit):
Fiscal Year
(In millions)
2024
2023
2022
Taxes computed at the federal rate
$
102.0 $
62.0 $
74.5
State and local income taxes, net of federal tax benefit
9.3
1.2
2.9
Valuation allowance
(0.3)
(198.8)
(84.4)
Global Intangible Low Taxed Income (GILTI )
3.3
5.0
—
Restructuring/Divestitures
—
—
23.0
Foreign earnings taxed at different rate
3.4
2.7
3.2
Withholding taxes
2.1
4.8
2.6
Preferential tax rate
(4.1)
(3.6)
(4.9)
Other
(12.3)
(1.5)
(1.4)
Income tax provision (benefit)
$
103.4 $
(128.2) $
15.5
In fiscal year 2024, the income tax provision of $103.4 million includes discrete tax benefits of $6.2 million, which includes
$3.3 million for share-based compensation and $0.8 million related to the recognition of a stranded deferred tax valuation
allowance in accumulated other comprehensive loss that was associated with the Company’s interest rate swap due to its
maturity (see Note 15).
In fiscal year 2024, the amount of GILTI is representative of the amount after GILTI tax credits and deductions. In fiscal year
2023, the amount of GILTI represents a full inclusion due to ATI’s net operating loss utilization and inability to utilize GILTI
tax credits. In fiscal year 2022, due to the loss on the sale of the Sheffield operations, there is no current year inclusion. The
Company has elected to recognize GILTI liabilities as an element of income tax expense in the period incurred.
Other benefits in the current year are primarily related to research and development benefits and the disallowance of the above
the line income related to the Advanced Manufacturing Production Credit (AMPC) as discussed in Note 18.
In the fourth quarter of fiscal year 2024, the Company was granted a preferential tax rate related to the PRS joint venture
operations in China for tax years 2024 through 2026. The preferential tax rate is 15%, compared to the statutory rate of 25%.
The Company must re-apply for the High and New-Technology Enterprise (HNTE) status every three years to be eligible for
the preferential rate. This same preferential rate was in effect for tax years 2021-2023.
The provision for income taxes for the fiscal year ended January 1, 2023, is mainly attributable to the Company’s foreign
operations and state income tax expense associated with states that limit net operating loss utilization as the expense related to
current year operations for federal and state purposes was mainly offset by the valuation allowance release attributable to that
income. On May 12, 2022, the Company sold its Sheffield, U.K. operations which resulted in a pre-tax loss of $112.2 million
(see Note 6 for further explanation) for which the benefit was disallowed for tax purposes, resulting in a $23.0 million tax
expense impact as shown in the effective tax rate reconciliation table above.
F-81
The Company’s income tax expense has been impacted by the effects of valuation allowances on federal and state deferred tax
assets for fiscal years 2022 through 2023. The Company recognizes deferred tax assets to the extent it believes these deferred
tax assets are more likely than not to be realized. Valuation allowances are established when it is estimated that it is more likely
than not the tax benefit of the deferred tax asset will not be realized. In making such determination, the Company considers all
available evidence, both positive and negative, regarding the estimated future reversals of existing taxable temporary
differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, historical taxable
income in prior carryback periods if carryback is permitted, and potential tax planning strategies which may be employed to
prevent an operating loss or tax credit carryforward from expiring unused. The verifiable evidence such as future reversals of
existing temporary differences and the ability to carryback are considered before the subjective sources such as estimated future
taxable income exclusive of temporary differences and tax planning strategies. In situations where a three-year cumulative loss
position exists, the ability to consider projections of future results as positive evidence to assess the realizability of deferred tax
assets is subjective. If the Company determines that it would not be able to realize its deferred tax assets in the future in excess
of their recorded net amount, an adjustment to the deferred tax asset valuation allowance would result.
In fiscal year 2023, ATI recorded a tax benefit associated with the valuation allowance due to the current year income for the
U.S. operations and a $140.3 million additional benefit was recorded related to the valuation allowance release associated with
ATI’s ability to utilize projections for future income.
In fiscal year 2022, ATI recorded a tax benefit associated with the valuation allowance due to the current year income for the
U.S. operations. As a result of the current year income, ATI utilized net operating loss carryovers which in turn resulted in a
release of the corresponding valuation allowance on the operating loss deferred tax assets.
The Company also maintained valuation allowances on deferred tax amounts recorded in AOCI in fiscal years 2024, 2023 and
2022 of $23.3 million, $24.1 million, and $23.9 million, respectively, which are not reflected in the preceding table reconciling
amounts recognized in the income tax provision (benefit) recorded in the statement of operations (see Note 15).
Deferred income taxes result from temporary differences in the recognition of income and expense for financial and income tax
reporting purposes, and differences between the fair value of assets acquired in business combinations accounted for as
purchases for financial reporting purposes and their corresponding tax bases. Deferred income taxes represent future tax
benefits or costs to be recognized when those temporary differences reverse. The categories of assets and liabilities that have
resulted in differences in the timing of the recognition of income and expense at December 29, 2024 and December 31, 2023
were as follows:
Fiscal Year
(In millions)
2024
2023
Deferred income tax assets
Net operating loss tax carryovers
$
73.4 $
133.0
Pensions
6.0
2.2
Postretirement benefits other than pensions
45.2
48.5
Tax credits
44.0
43.5
Research and development
25.7
20.7
Inventory valuation
24.3
1.1
Other items
102.8
107.5
Gross deferred income tax assets
321.4
356.5
Valuation allowance for deferred tax assets
(57.7)
(60.3)
Total deferred income tax assets
263.7
296.2
Deferred income tax liabilities
Basis of property, plant and equipment
180.5
124.8
Basis of amortizable intangible assets
13.4
14.9
Other items
28.0
25.5
Total deferred tax liabilities
221.9
165.2
Net deferred tax asset
$
41.8 $
131.0
The Company’s valuation allowance for deferred taxes was $57.7 million at December 29, 2024, $60.3 million at December 31,
2023 and $266.9 million at January 1, 2023. The reduction in the valuation allowance in fiscal year 2024 was primarily due to
a state valuation allowance release, which was mostly offset by the expiration of state tax attributes for income tax purposes.
The change in the valuation allowance in fiscal year 2023 was due to a $206.6 million valuation allowance release due to
F-82
taxable income during that fiscal year as well as projections of future years’ taxable income, of which $7.8 million was
reflected as a state and local tax benefit.
In fiscal year 2023, the deferred tax liability related to inventory changed from a deferred tax liability to a deferred tax asset.
This change is related to the recognition of the deferred tax liability associated with the accounting policy change from the
LIFO inventory cost method adopted by the Company during the fourth quarter of fiscal year 2021, which for tax purposes is
recognized over four years versus one year for book purposes. Fiscal year 2024 is the final year of inclusion related to the
recognition of the deferred tax liability associated with LIFO. The following summarizes the carryforward periods for the tax
attributes related to NOLs and credits by jurisdiction. The following summarizes the carryforward periods for the tax attributes
related to NOLs and credits by jurisdiction.
($ in millions, U.S. and U.K. NOL amounts are pre-tax, all other items are after-tax, and state is before federal benefit)
Jurisdiction
Attribute
Amount
Expiration Period
Amount expiring
within 5 years
Amount expiring in
5-20 years
U.S.
NOL
$83
Indefinite
$—
$—
U.S.
Foreign Tax Credit
$22
10 years
$22
$—
U.S.
Research and
Development Credit
$13
20 years
$—
$13
State
NOL
$73
Various
$14
$59
State
NOL
$1
Indefinite
$—
$—
State
Credits
$8
Various
$4
$4
U.K.
NOL
$9
Indefinite
$—
$—
Poland
Economic Zone Credit
$3
7 years
$3
$—
Income taxes paid and amounts received as refunds were as follows:
Fiscal Year
(In millions)
2024
2023
2022
Income taxes paid
$
18.2 $
16.7 $
18.9
Income tax refunds received
(3.2)
(0.9)
(0.4)
Income taxes paid, net
$
15.0 $
15.8 $
18.5
Deferred taxes of $9.9 million have been recorded for foreign withholding taxes on earnings expected to be repatriated to the
U.S. The Company does not intend to distribute previously taxed earnings resulting from the one-time transition tax under the
Tax Act, and has not recorded any deferred taxes related to such amounts. The remaining excess of the amount for financial
reporting over the tax basis of investments in foreign subsidiaries is indefinitely reinvested, and the determination of any
deferred tax liability on this amount is not practicable.
Uncertain tax positions are recorded using a two-step process based on (1) determining whether it is more-likely-than-not the
tax positions will be sustained on the basis of the technical merits of the position and (2) for those positions that meet the more-
likely-than-not recognition threshold, the Company records the largest amount of the tax benefit that is more than 50 percent
likely to be realized upon ultimate settlement with the related tax authority. The changes in the liability for unrecognized
income tax benefits for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023 were as follows:
Fiscal Year
(In millions)
2024
2023
2022
Balance at beginning of fiscal year
$
8.9 $
9.1 $
14.2
Increases in prior period tax positions
—
1.2
—
Decreases in prior period tax positions
(0.9)
—
(3.3)
Settlements
(0.2)
—
—
Expiration of the statute of limitations
—
(1.4)
(1.8)
Balance at end of fiscal year
$
7.8 $
8.9 $
9.1
For fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023, the liability includes $6.9 million, $7.2
million and $7.8 million, respectively, of unrecognized tax benefits that are classified within deferred income taxes as a
reduction of NOL carryforwards and other tax attributes. The total estimated unrecognized tax benefit that, if recognized,
would affect ATI’s effective tax rate is approximately $0.9 million. At this time, the Company believes that it is reasonably
F-83
possible that approximately $0.5 million of the estimated unrecognized tax benefits as of December 29, 2024 will be recognized
within the next twelve months based on the expiration of statutory review periods.
The Company recognizes accrued interest and penalties related to uncertain tax positions as income tax expense. The amounts
accrued for interest and penalty charges for the fiscal years 2024, 2023 and 2022 were not significant. At December 29, 2024
and December 31, 2023, the accrued liabilities for interest and penalties related to unrecognized tax benefits were $0.8 million
and $1.3 million, respectively.
The Company, and/or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and in various state and
foreign jurisdictions. A summary of tax years that remain subject to examination, by major tax jurisdiction, is as follows:
Jurisdiction
Earliest Year Open to
Examination
U.S. Federal
2024
States:
Pennsylvania
2021
Illinois
2021
California
2020
Foreign:
China
2021
Poland
2018
Note 18. Business Segments
The Company operates under two business segments: High Performance Materials & Components (HPMC) and Advanced
Alloys & Solutions (AA&S).
HPMC is comprised of the Specialty Materials and Forged Products businesses, as well as the ATI Europe distribution
operations. Approximately 86% of its revenue is derived from the aerospace & defense markets including nearly 60% of its
revenue from products for commercial jet engines and 10% from defense products. Other core markets include medical and
specialty energy. HPMC produces a wide range of high performance materials, components, and advanced metallic powder
alloys. These products are made from nickel-based alloys and superalloys, titanium and titanium-based alloys, and a variety of
other specialty materials. HPMC’s capabilities range from cast/wrought and powder alloy development to final production of
highly engineered finished components, and 3D-printed aerospace products.
The AA&S segment includes the Specialty Alloys & Components business, the Specialty Rolled Products business, the 60%-
owned STAL PRS joint venture, and the A&T Stainless 50%-owned joint venture that is reported in AA&S segment results
under the equity method of accounting. See Note 7 for further information on the Company’s joint ventures. AA&S is focused
on delivering high-value flat products, with a focus in aerospace & defense and other core markets, which comprise
approximately 60% of its revenue. Industrial markets comprise the remaining 40% of AA&S sales, which includes the
conventional energy and automotive end-markets. AA&S produces nickel-based alloys, titanium and titanium-based alloys,
and specialty alloys in a variety of forms including plate, sheet, and strip products.
ATI’s Chief Operating Decision Maker (CODM) is the Chief Executive Officer. Segment EBITDA, the Company’s segment
operating measure, is used by the CODM to assess segment operating performance and to determine the allocation of resources.
Segment EBITDA as a percentage of segment revenues is utilized to assess the profitability of each segment and whether the
Company’s strategies are resulting in margin expansion and expected operating performance improvements. The measure of
segment EBITDA excludes net interest expense, income taxes, depreciation and amortization, goodwill impairment charges,
debt extinguishment charges, corporate expenses, closed operations and other income (expense), restructuring and other credits/
charges, gains or losses from the sale of accounts receivables, strike related costs, long-lived asset impairments, pension
remeasurement gains and losses, other postretirement/pension curtailment and settlement gains and losses, and gains or losses
on sales of businesses. Management believes segment EBITDA, as defined, provides an appropriate measure of controllable
operating results at the business segment level.
Intersegment sales are generally recorded at full cost or market.
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Fiscal Year 2024
Fiscal Year 2023
Fiscal Year 2022
HPMC
AA&S
Total
HPMC
AA&S
Total
HPMC
AA&S
Total
Sales to external customers
$ 2,278.5 $ 2,083.6 $ 4,362.1 $ 2,120.2 $ 2,053.5 $ 4,173.7 $ 1,641.2 $ 2,194.8 $ 3,836.0
Intersegment sales
247.7
275.1
522.8
181.8
283.4
465.2
174.5
238.9
413.4
Total sales
2,526.2 2,358.7 4,884.9 2,302.0 2,336.9 4,638.9 1,815.7 2,433.7 4,249.4
Reconciliation of sales
Elimination of intersegment sales
(522.8)
(465.2)
(413.4)
Total consolidated sales
$ 4,362.1
$ 4,173.7
$ 3,836.0
Less(1):
Allocated corporate overhead(2)
65.7
65.4
60.1
58.6
37.9
34.2
Other segment items(3)
1,999.1 1,972.4
1,808.3 2,001.7
1,474.4 2,024.2
Segment EBITDA
461.4
320.9
782.3
433.6
276.6
710.2
303.4
375.3
678.7
Reconciliation of segment EBITDA
Corporate expenses
(64.0)
(62.3)
(60.3)
Closed operations and other
income (expenses)
10.8
(13.3)
(5.6)
Depreciation & amortization
(151.5)
(146.1)
(142.9)
Interest expense, net
(108.2)
(92.8)
(87.4)
Restructuring and other charges
(See Note 19)
(22.1)
(31.4)
(23.7)
Retirement benefit settlement loss
(See Note 14)
—
(41.7)
—
Pension remeasurement gain (loss)
(See Note 14)
(14.1)
(26.8)
100.3
Joint venture restructuring credit
(See Note 7)
—
—
0.9
Gain (loss) on sales of business, net
52.9
(0.6)
(105.4)
Income before taxes
$ 486.1
$ 295.2
$ 354.6
(1) The CODM is regularly provided with allocated corporate overhead and segment EBITDA, which is used to assess operating
performance. Therefore, the significant expense categories and amounts align with the segment-level information that is
regularly provided to the CODM. Intersegment expenses are included within the amounts shown.
(2) The increase in corporate overhead costs over the time periods presented represent the consolidation and centralization of
certain functions, including information technology, human resources and talent acquisition, payroll and accounts payable, into
the Company’s corporate shared services function. Such amounts are subject to change from year to year as allocation
methodologies are revised to match the nature of these corporate costs.
(3) Other segment items for each reportable segment include: cost of sales, general and administrative expenses, and gain/loss
on asset sales. General & administrative expenses consist of non-manufacturing payroll and benefits, office expenses,
professional service and legal expenses, occupancy expenses including rent and lease expense, and travel expense.
Total international sales were $1,836.9 million in fiscal year 2024, $1,922.9 million in fiscal year 2023, and $1,617.4 million in
fiscal year 2022. Of these amounts, sales by operations in the U.S. to customers in other countries were $1,425.4 million in
fiscal year 2024, $1,498.7 million in fiscal year 2023, and $1,217.9 million in fiscal year 2022.
F-85
Beginning in 2020, the U.S. government enacted various relief packages in response to the COVID-19 pandemic, including
refundable employee retention tax credits. The Company applied for these employee retention tax credits and deferred
recognition of a portion of the tax credits pending the completion of any potential audit or examination, or the expiration of the
related statute of limitations. During fiscal year ended December 29, 2024, the Company recognized a benefit of $16.7 million
in cost of sales on the consolidated statement of operations due to the expiration of the statute of limitations for a portion of
these credits. For the fiscal year ended December 29, 2024, the Company recognized $9.0 million of the benefit in the HPMC
segment and $7.7 million in the AA&S segment. See Note 21 for further explanation. In addition, results for the fiscal year
ended January 1, 2023 include $34 million related to this government sponsored COVID relief in segment EBITDA. HPMC
segment results for fiscal year 2022 include $27 million of benefits from the AMJP Program and employee retention credits,
and AA&S segment results for fiscal year 2022 include $7 million in employee retention credits.
AA&S segment EBITDA in fiscal year 2024 and 2023 included benefits from tax credits of $22.7 million and $10.1 million,
respectively, for the AMPC, which were reported in cost of sales in the consolidated statement of operations. Fiscal year 2024
segment EBITDA also includes charges of $11.8 million, primarily reported in selling & administrative expenses, for a
commercial negotiation with a customer, of which $6.3 million was included in the HPMC segment and $5.5 million in the
AA&S segment.
Corporate expenses are primarily classified as selling and administrative expenses in the consolidated statement of operations,
and consist of salaries and benefits, incentive compensation, facility leases and other costs of ATI’s corporate functions.
Closed operations and other expenses are primarily presented in selling and administrative expenses in the consolidated
statements of operations. These items included costs at closed facilities, including legal matters, environmental, real estate and
other facility costs, gains from the sale of non-core assets and foreign currency transaction gains and losses primarily related to
ATI’s European Treasury Center operation. Closed operations and other income (expense) for fiscal year 2024 includes an
$11.6 million gain on the sale of certain oil and gas rights, included within other income, net, on the consolidated statement of
operations, and favorable foreign currency transaction impacts as compared to the prior year period. Fiscal year 2024 also
includes a $2.3 million gain on the sale of assets for the Company’s idled Houston, PA facility, which is included within gain
on asset sales and sales of businesses, net, on the consolidated statement of operations. The Company received $3.5 million of
proceeds from this sale that are reported as an investing activity on the consolidated statement of cash flows. Closed operations
and other expenses in fiscal year 2023 reflect higher insurance costs associated with an outstanding insurance claim involving
our captive insurance company.
Depreciation expense in fiscal year 2023 includes $3.8 million of accelerated depreciation of fixed assets related to the
restructuring of our European operations and the closure of our Robinson, PA operations.
Gain on sales of businesses for fiscal year 2024 is related to a $52.9 million gain on the sale of the Company’s precision rolled
strip operations in New Bedford, MA and Remscheid, Germany, for which $48.0 million of proceeds, net of transaction costs,
were received and reported as an investing activity on the consolidated statement of cash flows. Loss on sales of businesses for
fiscal year 2023 is related to a $0.6 million loss on the sale of the Company’s Northbrook, IL operations, for which no proceeds
were received but $0.3 million of transaction costs were paid and reported as an investing activity on the consolidated statement
of cash flows. Gain (loss) on sales of businesses, net, for fiscal year 2022 relate to a $112.2 million loss on the sale of the
Company’s Sheffield, U.K. operations, partially offset by a $6.8 million gain from the sale of assets from the Pico Rivera, CA
operations. See Note 6 for further explanation regarding the sale of business transactions in fiscal years 2024 and 2022.
F-86
Certain additional information regarding the Company’s business segments is presented below:
Fiscal Year
(In millions)
2024
2023
2022
Depreciation and amortization:
High Performance Materials & Components
$
71.6 $
71.1 $
68.3
Advanced Alloys & Solutions
73.2
67.9
67.4
Other
6.7
7.1
7.2
Total depreciation and amortization
$
151.5 $
146.1 $
142.9
Capital expenditures:
High Performance Materials & Components
$
132.0 $
100.4 $
33.3
Advanced Alloys & Solutions
103.6
97.2
89.6
Corporate
3.5
3.1
8.0
Total capital expenditures
$
239.1 $
200.7 $
130.9
Fiscal Year
Identifiable assets:
2024
2023
2022
High Performance Materials & Components
$
2,225.9 $
1,990.9 $
1,749.3
Advanced Alloys & Solutions
2,207.8
1,996.7
1,981.1
Corporate:
Deferred Taxes
46.5
135.7
4.7
Cash and cash equivalents and other
750.4
861.8
710.5
Total assets
$
5,230.6 $
4,985.1 $
4,445.6
Fiscal Year
Fiscal Year
Fiscal Year
($ in millions)
2024
Percent
of total
2023
Percent
of total
2022
Percent
of total
Total assets:
United States
$
4,666.3
89 % $
4,463.7
90 % $
3,942.7
89 %
China
310.3
6 %
295.8
6 %
321.1
7 %
Other
254.0
5 %
225.6
4 %
181.8
4 %
Total Assets
$
5,230.6
100 % $
4,985.1
100 % $
4,445.6
100 %
Note 19. Restructuring and other charges
For the fiscal year ended December 29, 2024, restructuring and other charges were $22.1 million and include $11.3 million of
start-up costs, $4.6 million of charges associated with the Company’s European restructuring, $4.1 million of severance-related
restructuring charges for approximately 100 employees primarily related to cost reduction actions in our domestic operation,
and $2.1 million of transaction related costs. These costs were recorded in the consolidated statement of operations based on
the nature of the charge, with $15.3 million recorded as cost of sales, $2.7 million recorded as selling and administrative
expenses and $4.1 million as restructuring charges on the consolidated statements of operations.
For the fiscal year ended December 31, 2023, restructuring and other charges were $31.4 million and include $7.7 million of
severance-related restructuring charges and $23.7 million of charges included within cost of sales on the consolidated
statements of operations. The $7.7 million of severance-related restructuring charges represent severance for the involuntary
reduction of approximately 110 employees primarily for the restructuring of the European operations and across ATI’s
domestic operations. The $23.7 million of charges within cost of sales include $11.5 million of start-up costs, $1.9 million of
costs associated with an unplanned outage at our Lockport, NY facility, and $10.3 million primarily for asset write-offs for the
restructuring of our European operations and the closure of our Robinson, PA operations.
For the fiscal year ended January 1, 2023, restructuring and other charges were $23.7 million, which included a $28.5 million
charge for a litigation settlement (see Note 21), partially offset by $4.8 million of restructuring credits for reductions in
severance-related reserves related to approximately 110 employees based on changes in planned operating rates and revised
workforce estimates.
F-87
Restructuring reserves for severance cost activity is as follows:
Severance and Employee
Benefit Costs
December 29, 2024
December 31, 2023
January 1, 2023
Beginning of fiscal year balance
$
15.2 $
9.8 $
17.7
Additions/(Adjustments)
4.1
7.7
(4.8)
Divestitures
(3.5)
—
—
Payments
(6.8)
(2.3)
(3.1)
End of fiscal year balance
$
9.0 $
15.2 $
9.8
During fiscal year 2024, the Company de-recognized $3.5 million of restructuring reserves in connection with the sale of its
precision rolled strip operations (see Note 6 for further explanation). All of the $9.0 million restructuring reserve balance at
December 29, 2024 is recorded in other current liabilities on the December 29, 2024 consolidated balance sheet. Of the $15.2
million restructuring reserve balance at December 31, 2023, $10.9 million is recorded in other current liabilities and $4.3
million is recorded in other long-term liabilities on the December 31, 2023 consolidated balance sheet.
Note 20. Per Share Information
The following table sets forth the computation of basic and diluted net income per common share:
(In millions, except per share amounts)
Fiscal Year
2024
2023
2022
Numerator:
Numerator for basic net income per common share -
Net income attributable to ATI
$
367.8 $
410.8 $
323.5
Effect of dilutive securities:
4.75% Convertible Senior Notes due 2022
—
—
2.2
3.5% Convertible Senior Notes due 2025
5.9
10.6
11.3
Numerator for diluted net income per common share -
Net income attributable to ATI after assumed conversions
$
373.7 $
421.4 $
337.0
Denominator:
Denominator for basic net income per common share—weighted average shares
130.4
128.1
127.5
Effect of dilutive securities:
Share-based compensation
3.2
3.1
2.1
4.75% Convertible Senior Notes due 2022
—
—
2.8
3.5% Convertible Senior Notes due 2025
13.0
18.8
18.8
Denominator for diluted net income per common share—adjusted weighted average
shares and assumed conversions
146.6
150.0
151.2
Basic net income attributable to ATI per common share
$
2.82 $
3.21 $
2.54
Diluted net income attributable to ATI per common share
$
2.55 $
2.81 $
2.23
Common stock that would be issuable upon the assumed conversion of the 2025 Convertible Notes, prior to their redemption
during the third quarter of 2024, and the 2022 Convertible Notes, prior to their maturity during the second quarter of 2022, and
other option equivalents and contingently issuable shares are excluded from the computation of contingently issuable shares,
and therefore, from the denominator for diluted earnings per share, if the effect of inclusion is anti-dilutive. There were no anti-
dilutive shares for fiscal years 2024, 2023 and 2022.
Periodically, the Company’s Board of Directors authorizes the repurchase of ATI common stock (the “Share Repurchase
Program”), the most recent of which was $700 million that was announced in September 2024. Repurchases under these
programs are made in the open market or in privately negotiated transactions, with the amount and timing of repurchases
depending on market conditions and corporate needs. Open market repurchases are structured to occur within the pricing and
F-88
volume requirements of SEC Rule 10b-18. The Company’s ongoing stock repurchase programs do not obligate the Company
to repurchase any specific number of shares and may be modified, suspended, or terminated at any time by the Company’s
Board of Directors without prior notice. In fiscal years 2024, 2023 and 2022, ATI used $260.0 million, $85.2 million and
$139.9 million, respectively, to repurchase 5.3 million, 2.0 million and 5.2 million shares, respectively, of its common stock
under the Share Repurchase Program. At December 29, 2024, the Company has utilized $110 million of the $700 million
currently authorized under the Share Repurchase Program.
Effective January 2, 2023, the Company’s share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction
Act of 2022. Excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as part of the
cost basis of the shares within treasury stock. The cost of share repurchases may differ from the repurchases of common stock
amounts in the consolidated statements of cash flows due to these excise taxes. For fiscal year 2024, there was no excise tax
due to the impact of the conversion of the 2025 Convertible Notes (see Note 10). For fiscal year 2023, the cost of share
repurchases of $85.8 million differs from the repurchases of common stock amounts in the consolidated statements of cash
flows due to these excise taxes.
Note 21. Commitments and Contingencies
Future minimum rental commitments under leases are disclosed in Note 11. Commitments for expenditures on property, plant
and equipment at December 29, 2024 were approximately $32.0 million.
The Company is subject to various domestic and international environmental laws and regulations that govern the discharge of
pollutants and disposal of wastes, and which may require that it investigate and remediate the effects of the release or disposal
of materials at sites associated with past and present operations. The Company could incur substantial cleanup costs, fines, and
civil or criminal sanctions, third party property damage or personal injury claims as a result of violations or liabilities under
these laws or noncompliance with environmental permits required at its facilities. The Company is currently involved in the
investigation and remediation of a number of its current and former sites, as well as third party sites.
Environmental liabilities are recorded when the Company’s liability is probable and the costs are reasonably estimable. In
many cases, however, the Company is not able to determine whether it is liable or, if liability is probable, to reasonably estimate
the loss or range of loss. Estimates of the Company’s liability remain subject to additional uncertainties, including the nature
and extent of site contamination, available remediation alternatives, the extent of corrective actions that may be required, and
the number, participation, and financial condition of other potentially responsible parties (PRPs). The Company adjusts its
accruals to reflect new information as appropriate. Future adjustments could have a material adverse effect on the Company’s
consolidated results of operations in a given period, but the Company cannot reliably predict the amounts of such future
adjustments.
At December 29, 2024, the Company’s reserves for environmental remediation obligations totaled approximately $15 million,
of which $6 million was included in other current liabilities. The reserve includes estimated probable future costs of $3 million
for federal Superfund and comparable state-managed sites; $6 million for formerly owned or operated sites for which the
Company has remediation or indemnification obligations; $5 million for owned or controlled sites at which Company
operations have been or plan to be discontinued; and $1 million for sites utilized by the Company in its ongoing operations.
The Company continues to evaluate whether it may be able to recover a portion of future costs for environmental liabilities
from third parties and to pursue such recoveries where appropriate.
Based on currently available information, it is reasonably possible that the costs for active matters may exceed the Company’s
recorded reserves by as much as $16 million. Future investigation or remediation activities may result in the discovery of
additional hazardous materials, potentially higher levels of contamination than discovered during prior investigation, and may
impact costs associated with the success or lack thereof in remedial solutions. Therefore, future developments, administrative
actions or liabilities relating to environmental matters could have a material adverse effect on the Company’s consolidated
financial condition or results of operations.
The timing of expenditures depends on a number of factors that vary by site. The Company expects that it will expend present
accruals over many years and that remediation of all sites with which it has been identified will be completed within thirty
years.
F-89
A number of other lawsuits, claims and proceedings have been or may be asserted against the Company relating to the conduct
of its currently and formerly owned businesses, including those pertaining to product liability, environmental, health and safety
matters and occupational disease (including as each relates to alleged asbestos exposure), as well as patent infringement,
commercial, government contracting, construction, employment, employee and retiree benefits, taxes, environmental, and
stockholder and corporate governance matters. While the outcome of litigation cannot be predicted with certainty, and some of
these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the
disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial condition or
liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on
the Company’s consolidated results of operations for that period.
Beginning in 2020, the U.S. government enacted various relief packages in response to the COVID-19 pandemic, one of which
was the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act included, among other items,
provisions relating to refundable employee retention payroll tax credits. The Company applied for these employee retention tax
credits and recognized a portion of the benefit from these credits as they were received in the statement of operations in the
fiscal year ended December 31, 2022 (see Noe 18). Due to the complex nature of the employee retention credit computations,
the Company deferred recognition of a portion of the tax credits pending the completion of any potential audit or examination,
or the expiration of the related statute of limitations. During the fiscal year ended December 29, 2024, the Company recognized
a benefit of $16.7 million in cost of sales on the consolidated statement of operations due to the expiration of the statute of
limitations for a portion of these credits. As of December 29, 2024, the Company has approximately $12 million of remaining
deferred retention tax credits, of which the statute of limitations expire for $7 million in 2025 with the remaining expirations
occurring in 2027. There is pending legislation that could extend the statute of limitations, which would impact the timing of
the expected recognition of the remaining credits if and when such legislation is passed.
In August 2024, the Company received notice that it and certain of its affiliates are parties to two lawsuits captioned (1) William
L. Schoen, Mary J. Nesbit, Robin L. Rosewicz, George E. Poole and James E. Swartz, Jr., individually and as representatives of
a class of participants and beneficiaries of the Allegheny Technologies Incorporated Pension Plan v. ATI Inc., The Allegheny
Technologies Incorporated Pension Plan Administrative Committee, State Street Global Advisors Trust Co., and John Does 1-5
(Case No. 2:24-cv-01109) and (2) John Souza and Karen Souza, individually and as representatives on behalf of a class of
similarly situated persons v. ATI Inc. and State Street Global Advisors Trust Co. (Case No. 2:24-cv-01214), both of which are
filed in federal district court for the Western District of Pennsylvania. These lawsuits, which were consolidated in late 2024,
assert various claims associated with the Company’s October 2023 purchase of group annuity contracts to transfer a portion of
its U.S. qualified defined benefit pension plan obligations to Athene Annuity and Life Company and Athene Annuity & Life
Assurance of New York. The Company filed a Motion to Dismiss the consolidated claims on January 27, 2025. The Company
disputes and intends to vigorously defend against these claims, but given the preliminary nature of these matters, cannot predict
their outcome or estimate any range of reasonably possible loss at this time.
ATI Titanium LLC (ATI Titanium), a subsidiary of ATI Inc., was party to a lawsuit captioned US Magnesium, LLC v. ATI
Titanium LLC (Case No. 2:17-cv-00923-DB) and filed in federal district court in Salt Lake City, UT, pertaining to a Supply
and Operating Agreement between US Magnesium LLC (USM) and ATI Titanium entered into in 2006 (the Supply
Agreement). In 2016, ATI Titanium notified USM that it would suspend performance under the Supply Agreement in reliance
on certain terms and conditions included in the Supply Agreement. USM subsequently filed a claim challenging ATI
Titanium’s right to suspend performance under the Supply Agreement. ATI Titanium and USM reached a litigation settlement
in fiscal year 2022 for $28.5 million, which is reported within other (nonoperating) expense on the consolidated statement of
operations and was paid in the fiscal year ended January 1, 2023.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
In accordance with Securities Exchange Act Rules 13-1-15(e) and 15d-15(e), our management, under the supervision of our
Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective as of December 29, 2024.
F-90
(b) Management’s Report on Internal Control over Financial Reporting.
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange
Act of 1934, as amended, as a process designed by, or under the supervision of, the company’s principal executive and principal
financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and includes those policies and procedures that:
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
the assets of the company;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because
of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance
and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting
can also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that
material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.
However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 29, 2024. In making this assessment, the Company’s management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO) in Internal Control-Integrated Framework.
Based on that assessment, the Chief Executive Officer and Chief Financial Officer concluded as of December 29, 2024, the
Company’s internal control over financial reporting was effective based on those criteria.
The Company’s independent registered public accounting firm that audited the consolidated financial statements included in
this Annual Report issued an attestation report on effectiveness of the Company’s internal control over financial reporting as of
December 29, 2024.
(c) Changes to Internal Control over Financial Reporting.
There were no changes to our internal control over financial reporting that occurred during the fiscal quarter ended December
29, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Certifications
The certifications of the Company’s Chief Executive Officer and Chief Financial Officer required by the Sarbanes-Oxley Act
are included as Exhibits 31 and 32 to this Annual Report on Form 10-K. In addition, in fiscal year 2024, the Company’s Chief
Executive Officer provided to the New York Stock Exchange the annual CEO certification pursuant to Section 303A regarding
the Company’s compliance with the New York Stock Exchange’s corporate governance listing standards.
F-91
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of ATI Inc.
Opinion on Internal Control Over Financial Reporting
We have audited ATI Inc. and subsidiaries’ internal control over financial reporting as of December 29, 2024, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, ATI Inc. and subsidiaries (the Company) maintained, in all
material respects, effective internal control over financial reporting as of December 29, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 29, 2024 and December 31, 2023, the related
consolidated statements of operations, comprehensive income, cash flows and statements of changes in consolidated equity for
each of the three years in the period ended December 29, 2024, and the related notes and our report dated February 21, 2025
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
February 21, 2025
F-92
Item 9B. Other Information
Rule 10b5-1 Plan Elections
During the quarterly period ended December 29, 2024, Robert S. Wetherbee entered into a pre-arranged stock trading plan on
December 12, 2024, which provides for the potential sale of up to 300,000 shares of the Company’s Common Stock between
March 13, 2025 and December 5, 2025 for his personal tax and estate planning purposes.
This trading plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense
criteria articulated by Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, as well as the Company’s
policies and procedures pertaining to transactions in Company securities.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information concerning our directors required by this item is incorporated and made part hereof by reference to the material
appearing under the heading “Our Corporate Governance” and “Election of Directors” and the information concerning our
executive officers required by this item is incorporated and made part hereof by reference to the material appearing under the
heading “Members of ATI's Executive Management,” in the ATI Proxy Statement for the 2025 Annual Meeting of
Stockholders (the “2025 Proxy Statement”), which will be filed with the Securities and Exchange Commission, pursuant to
Regulation 14A, not later than 120 days after the end of the fiscal year. Information concerning the Audit and Risk Committee
and its financial expert required by this item is incorporated and made part hereof by reference to the material appearing under
the heading “Our Corporate Governance-Board Information- Board Committees” in the 2025 Proxy Statement. The
information concerning our insider trading policies and procedures required by this item is incorporated and made part hereof
by reference to the material appearing under the heading “Insider Trading Policies and Procedures” in the 2025 Proxy
Statement.
ATI has adopted Corporate Guidelines for Business Conduct and Ethics that apply to all employees including its principal
executive officer or principal financial and accounting officer, or persons performing similar functions. The Corporate
Guidelines for Business Conduct and Ethics as well as the charters for the Company’s Audit and Risk, Nominating and
Governance, Personnel and Compensation, and Technology Committees, as well as periodic and current reports filed with the
SEC, are available through the Company’s website at http://www.atimaterials.com and are available in print free of charge to
any shareholder upon request. To obtain a copy, contact the Corporate Secretary, ATI Inc., 2021 McKinney Avenue, Dallas,
Texas 75201 (telephone: 800-289-7454). The Company intends to post on its website any waiver from or amendment to the
guidelines that apply to the Company’s Principal Executive Officer or Principal Financial and Accounting Officer (or persons
performing similar functions) that relate to elements of the code of ethics identified by the Securities and Exchange
Commission in Item 406(b) of Regulation S-K. Information required by this item with respect to the delinquent filing during
2024 of reports required under Section 16 of the Securities Exchange Act of 1934 is incorporated by reference to “Delinquent
Section 16 Filings” as set forth in the 2025 Proxy Statement.
Item 11. Executive Compensation
Information required by this item is incorporated by reference to “Our Corporate Governance- Director Compensation,”
“Executive Compensation” and “Compensation Committee Interlocks and Insider Participation” as set forth in the 2025 Proxy
Statement.
F-93
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information relating to the ownership of equity securities by certain beneficial owners and management is incorporated by
reference to “Stock Ownership Information” as set forth in the 2025 Proxy Statement.
Equity Compensation Plan Information
Information about our equity compensation plans at December 29, 2024 was as follows:
(a)
(In thousands, except per share amounts)
Number of
Shares to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights (1)
Weighted
Average
Exercise Price of
Outstanding
Options, Warrants
and Rights (2)
Number of Shares
Remaining Available
for Future Issuance
Under Equity
Compensation Plans (3)
(excluding securities
reflected in column (a))
Equity Compensation Plans Approved by Shareholders
$
3,938 $
— $
5,559
Equity Compensation Plans Not Approved by Shareholders
—
—
—
Total
3,938 $
— $
5,559
(1)
Includes stock-settled equity awards previously granted under the ATI Inc. 2022 Incentive Plan (the “2022 Incentive
Plan”) and prior incentive plans. Amounts reflected for performance share unit awards represent the maximum number
of shares that could be awarded at the conclusion of the applicable performance cycle.
(2)
Outstanding stock-settled awards are not included in this calculation.
(3)
Represents shares available for issuance under the 2022 Incentive Plan (which provides for the issuance of stock options,
stock appreciation rights, restricted shares, restricted stock units, performance and other stock-based awards). See Note
16. Stockholders’ Equity for a discussion of the Company’s stock-based compensation plans.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information required by this item is incorporated by reference to “Related Party Transactions” and “Our Corporate Governance-
Board Information- Board Composition and Independence” as set forth in the 2025 Proxy Statement.
Item 14. Principal Accountant Fees and Services
Information required by this item is incorporated by reference to “Ratification of Selection of Independent Auditors” as set
forth in the 2025 Proxy Statement.
PART IV
Item 15. Exhibits, Financial Statements and Financial Statement Schedules
(a) Financial Statements, Financial Statement Schedules and Exhibits:
(1) Financial Statements
The following consolidated financial statements and report are filed as part of this report under Item 8 – “Financial Statements
and Supplementary Data”:
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm
Consolidated Statements of Operations — Fiscal Years Ended December 29, 2024, December 31, 2023, and January 1, 2023
Consolidated Statements of Comprehensive Income — Fiscal Years Ended December 29, 2024, December 31, 2023 and
January 1, 2023
Consolidated Balance Sheets at December 29, 2024 and December 31, 2023
Consolidated Statements of Cash Flows — Fiscal Years Ended December 29, 2024, December 31, 2023, and January 1, 2023
Statements of Changes in Consolidated Equity — Fiscal Years Ended December 29, 2024, December 31, 2023, and January 1,
2023
Notes to Consolidated Financial Statements
F-94
The report of ATI’s independent registered public accounting firm (PCAOB ID: 42) with respect to the above-referenced
financial statements and their report on internal control over financial reporting are included in Item 8 and Item 9A of this Form
10-K. Their consent appears as Exhibit 23.1 of this Form 10-K.
(2) Financial Statement Schedules
All schedules set forth in the applicable accounting regulations of the Securities and Exchange Commission either are not
required under the related instructions or are not applicable and, therefore, have been omitted.
(3) Exhibits
Exhibits required to be filed by Item 601 of Regulation S-K are listed below. Documents not designated as being incorporated
herein by reference are filed herewith. The paragraph numbers correspond to the exhibit numbers designated in Item 601 of
Regulation S-K.
EXHIBIT INDEX
3.1
Certificate of Incorporation of Allegheny Technologies Incorporated, as amended (incorporated by reference to
Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No.
1-12001)).
3.2
Certificate of Amendment of Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the
Registrant’s Current Report on Form 8-K dated June 22, 2022 (File No. 1-12001).
3.3
Fourth Amended and Restated Bylaws of ATI Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s
Current Report on Form 8-K dated June 22, 2022 (File No. 1-12001)).
4.1
Indenture dated as of December 15, 1995 between Allegheny Ludlum Corporation and The Chase Manhattan
Bank (National Association), as trustee, relating to Allegheny Ludlum Corporation’s 6.95% Debentures due
2025 (incorporated by reference to Exhibit 4(a) to Allegheny Ludlum Corporation’s Report on Form 10-K for
the year ended December 31, 1995 (File No. 1-9498)).
4.2
First Supplemental Indenture by and among Allegheny Technologies Incorporated, Allegheny Ludlum
Corporation and The Chase Manhattan Bank (National Association), as Trustee, dated as of August 15, 1996
(incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated August 21, 1996
(File No. 1-12001)).
4.3
Supplemental Indenture, dated as of December 22, 2011, among Allegheny Ludlum Corporation, ALC Merger,
LLC, and The Bank of New York Mellon (as successor to The Chase Manhattan Bank (National Association)),
as Trustee (incorporated by reference to Exhibit 4.4 to the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2011 (File No. 1-12001)).
4.4
Indenture, dated June 1, 2009, between Allegheny Technologies Incorporated and The Bank of New Your
Mellon, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K
dated June 3, 2009 (File No. 1-2001)).
4.5
Form of 5.875% Senior Note due 2027 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current
Report on Form 8-K dated November 22, 2019 (File No. 1-12001)).
4.6
Sixth Supplemental Indenture, dated November 19, 2019, between Allegheny Technologies Incorporated and
The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current
Report on Form 8-K dated November 22, 2019 (File No. 1-12001)).
4.7
Indenture, dated June 22, 2020, by and between the Company The Bank of New York Mellon, as trustee
(incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated June 22, 2020
(File No. 1-12001))
4.8
Form of 3.50% Convertible Senior Note due 2025 (incorporated by reference to Exhibit 4.2 to the Registrant’s
Current Report on Form 8-K dated June 22, 2020 (File No. 1-12001))
4.9
Indenture, dated as of September 14, 2021, by and between Allegheny Technologies Incorporated and
Computershare Trust Company, N.A., as successor Trustee to Wells Fargo Bank, National Association, as
trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated
September 14, 2021 (File No. 1-12001))
4.10
First Supplemental Indenture, dated as of September 9, 2021, by and between Allegheny Technologies
Incorporated and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2
to the Registrant’s Current Report on Form 8-K dated September 14, 2021 (File No. 1-12001))
4.11
Form of 4.875% Senior Note due 2029 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current
Report on Form 8-K dated September 14, 2021 (File No. 1-12001))
Exhibit
No.
Description
F-95
4.12
Form of 5.125% Senior Note due 2031 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current
Report on Form 8-K dated September 14, 2021 (File No. 1-12001))
4.13
Second Supplemental Indenture, dated August 11, 2023, between ATI Inc. and Computershare Trust Company,
as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K dated
August 11, 2023) (File No. 1-12001))
4.14
Form of 7.25% Senior Notes due 2030 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current
Report on Form 8-K dated August 11, 2023) (File No. 1-12001))
4.15
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
(incorporated by reference to Exhibit 4.13 to the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2020 (File No. 1-12001)).
10.1
Allegheny Technologies Incorporated Fee Continuation Plan for Non-Employee Directors, as amended
(incorporated by reference to Exhibit 10.3 to the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2004 (File No. 1-12001)).*
10.2
Allegheny Technologies Incorporated Benefit Restoration Plan, as amended (incorporated by reference to
Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No.
1-12001)).*
10.3
Amendment to the Allegheny Technologies Incorporated Pension Plan effective January 1, 2003 (incorporated
by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the year ended December 31,
2003 (File No. 1-12001)).*
10.4
Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 99.1 to the Registrant’s
Current Report on Form 8-K dated December 10, 2019 (File No. 1-12001)).*
10.5
Allegheny Technologies Incorporated Defined Contribution Restoration Plan, as amended and restated as of
January 1, 2015 (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2015 (File No. 1-12001)).*
10.6
Allegheny Technologies Incorporated 2020 Incentive Plan (incorporated by reference to Appendix A to the
Registrant’s Definitive Proxy Statement filed on March 24, 2020 (File No 1-12001)).*
10.7
Form of Time-Vested Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.16 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 1-12001)).*
10.8
Form of Performance-Vested Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.17 to
the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 1-12001)).
10.9
Addendum to Performance-Vested Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10-1
to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 (File No. 1-12001)*
10.10
Form of Performance-Vested Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10-15 to
the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2021 (File No. 1-12001)*
10.11
ATI Inc. 2022 Incentive Plan (incorporated by reference to Appendix A to the Registrant’s Definitive Proxy
Statement filed on March 25, 2022 (File No 1-12001)).
10.12
Form of 2023 Time-Vested Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10,12 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2022 (File No. 1-12001))*
10.13
Form of 2023 Performance-Vested Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10,13
to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2022 (File No. 1-12001))*
10.14
Form of 2024 Time-Vested Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.14 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2023)*
10.15
Form of 2024 Performance-Vested Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.15
to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2023)*
10.16
Amended Executive Severance Benefit Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended September 29, 2024)*
10.17
Form of 2025 Time-Vested Restricted Stock Unit Agreement (filed herewith)*
10.18
Form of 2025 Performance-Vested Restricted Stock Unit Agreement (filed herewith)*
10.19
Retirement, Transition and Release Agreement, dated as of January 8, 2024, by and between the Company and
Elliot S. Davis (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated
January 10, 2024 (File No. 1-12002))*
Exhibit
No.
Description
F-96
10.20
First Amended and Restated Revolving Credit, Term Loan, Delayed Draw Term Loan and Security Agreement,
dated as of September 30, 2019, by and among the borrowers party thereto, the Company and other guarantors
party thereto, the lenders party thereto, and PNC Bank, National Association, as Lender and Agent
(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2019 (File No. 1-12001)).
10.21
Amendment No. 2, dated as of September 9, 2022, to First Amended and Restated Revolving Credit, Term
Loan, Delayed Draw Term Loan and Security Agreement, dated as of September 30, 2019, by and among the
borrowers party thereto, the Company and other guarantors party thereto, the lenders party thereto, and PNC
Bank, National Association, as Lender and Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (File No. 1-12001).
19.1
Insider Trading Policy (filed herewith).
21.1
Subsidiaries of the Registrant (filed herewith).
23.1
Consent of Ernst & Young LLP (filed herewith).
31.1
Certification of Chief Executive Officer required by Securities and Exchange Commission Rule 13a-14(a) or
15d-14(a) (filed herewith).
31.2
Certification of Principal Financial Officer required by Securities and Exchange Commission Rule 13a-14(a) or
15d-14(a) (filed herewith).
32.1
Certification pursuant to 18 U.S.C. Section 1350 (filed herewith).
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Exhibit
No.
Description
*
Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Report.
Certain instruments defining the rights of holders of long-term debt of the Company and its subsidiaries have been omitted from
the Exhibits in accordance with Item 601(b)(4)(iii) of Regulation S-K. A copy of any omitted document will be furnished to the
Commission upon request.
Item 16. Form 10-K Summary
Not applicable.
F-97
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
ATI INC.
Date: February 21, 2025
By
/s/ Kimberly A. Fields
Kimberly A. Fields
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and as of the 21st day of February, 2025.
/s/ Kimberly A. Fields
/s/ Donald P. Newman
Kimberly A. Fields
President and Chief Executive Officer
(Principal Executive Officer)
Donald P. Newman
Executive Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
/s/ Robert S. Wetherbee
/s/ Michael B. Miller
Robert S. Wetherbee
Executive Chairman
Michael B. Miller
Vice President, Controller and Chief
Accounting Officer
(Principal Accounting Officer)
/s/ Leroy M. Ball
/s/ David P. Hess
Leroy M. Ball
Director
David P. Hess
Director
/s/ Herbert J. Carlisle
/s/ Marianne Kah
Herbert J. Carlisle
Director
Marianne Kah
Director
/s/ Carolyn Corvi
/s/ David J. Morehouse
Carolyn Corvi
Director
David J. Morehouse
Director
/s/ J. Brett Harvey
/s/ Ruby Sharma
J. Brett Harvey
Director
Ruby Sharma
Director
F-98
7 ATI 2024 ANNUAL REPORT
Fiscal Year
2022
2023
2024
Net income attributable to ATI
324
411
368
Adjustments for special items, pre-tax:
Restructuring and other charges (a)
23
36
22
Pension remeasurement loss (gain) (b)
(100)
27
14
Retirement benefit settlement loss (c)
-
41
-
Loss (gain) on sales of businesses, net (e)
105
-
(53)
Total pre-tax adjustments
28
104
(17)
Net change in deferred taxes and valuation allowance (f)
-
(138)
-
Income tax on pre-tax adjustments for special items
(1)
(4)
4
Net income attributable to ATI, as adjusted
$351
$373
$355
ATI INC. AND SUBSIDIARIES
(Unaudited, dollars in millions, except per share amounts)
The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America
(“GAAP”). However, management believes that certain non-GAAP financial measures, used in managing the business, may provide users
of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP
financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance
with GAAP. The following table provides the calculation of the non-GAAP financial measures discussed in this annual report.
Fiscal Year
2022
2023
2024
Reported
Adjusted
Reported
Adjusted
Reported
Adjusted
Numerator for Basic net income per common share -
Net income attributable to ATI
$324
$351
$411
$373
$368
$355
Effect of dilutive securities
13
13
11
11
6
6
Numerator for Diluted net income per common share -
Net income attributable to ATI after assumed conversions
$337
$364
$422
$384
$374
$361
Denominator for Basic net income per common share -
Weighted average shares outstanding
128
128
128
128
131
131
Effect of dilutive securities
23
23
22
22
16
16
Denominator for Diluted net income per common share -
Adjusted weighted average shares assuming conversions
151
151
150
150
147
147
Diluted net income attributable to ATI per common share
$2.23
$2.41
$2.81
$2.56
$2.55
$2.46
Non-GAAP Financial Measures
WWW.ATIMATERIALS.COM 8
ATI INC. AND SUBSIDIARIES
Fiscal Year
2022
2023
2024
Net income attributable to ATI
$324
$411
$368
Net income attributable to noncontrolling interests
16
13
15
Net income
340
424
383
(+) Depreciation and Amortization
143
146
152
(+) Interest Expense
87
93
108
(+/-) Income Tax Provision (Benefit)
16
(128)
103
(+) Restructuring and other charges (a)
23
32
22
(+/-) Pension remeasurement loss (gain) (b)
(100)
27
14
(+) Retirement benefit settlement loss (c)
-
41
-
(-) Joint venture restructuring credits (d)
(1)
-
-
(+/-) Loss (gain) on sales of businesses, net (e)
105
-
(53)
Total ATI Adjusted EBITDA
$613
$635
$729
Non-GAAP Financial Measures
The following adjustments are more fully described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 8.
Financial Statements and Supplementary Data, in the 2024 annual report on Form 10-K. This presentation of adjusted results per diluted share includes the effects of
convertible debt, if dilutive.
(a) Fiscal year 2024 includes pre-tax charges totaling $22 million, which include $11 million of start-up costs, $5 million of charges for the European transformation,
$4 million for severance-related restructuring charges, and $2 million of transaction costs. Fiscal year 2023 results include pre-tax charges totaling $36 million, which
include $12 million of start-up costs, $2 million of costs associated with an unplanned outage at our Lockport, NY; facility, $8 million of severance-related restructuring
charges, primarily for the restructuring of our European operations and for reductions across ATI’s domestic operations; and $14 million for asset write-offs, primarily
for the restructuring of our European operations and the closure of our Robinson, PA, operations, of which $4 million was accelerated depreciation on fixed assets and
is included in depreciation and amortization in the above table. Fiscal year 2022 results includes a $28 million pre-tax litigation reserve for the case of US Magnesium,
LLC v. ATI Titanium LLC, a subsidiary of ATI Inc., partially offset by a $5 million pre-tax credit for restructuring charges, primarily related to lowered severance-related
reserves based on changes in planned operating rates and revised workforce reduction estimates.
(b) Fiscal year 2024 and 2023 results include a $14 million and $27 million, respectively, pre-tax loss, and fiscal year 2022 results include a $100 million pre-tax gain for
actuarial gains and losses arising from the remeasurement of the Company’s pension assets and obligations.
(c) On October 17, 2023, the Company completed a voluntary cash out for term vested employees and annuity buyouts related to approximately 8,200 U.S. qualified
defined benefit pension plan participants. As a result, fiscal year 2023 results include a $41 million pre-tax settlement loss.
(d) Fiscal year 2022 results include a $1 million pre-tax credit for ATI’s 50% share of Allegheny & Tsingshan Stainless joint venture’s credit for restructuring charges.
(e) Fiscal year 2024 results include a $53 million pre-tax gain on the sale of our precision rolled strip operations in New Bedford, MA, and Remscheid, Germany. Fiscal
year 2022 results include a $112 million pre-tax loss on the sale of our Sheffield, UK, operations, partailly offset by a $7 million pre-tax gain on the sale of our Pico Rivera,
CA, operations.
(f) Fiscal year 2023 results includes a $140 million discrete tax benefit primarily related to the reversal of a portion of deferred tax valuation allowances due to exiting
the three-year cumulative loss condition for U.S. federal and state jurisdictions at fiscal year-end 2023, partially offset by a $2 million charge for withholding taxes
associated with the restructuring of our European operations.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
INVESTOR INFORMATION
Corporate Headquarters
2021 McKinney Avenue
Suite 1100
Dallas, TX 75201
1-800-289-7454
Annual Meeting
The Annual Meeting of Stockholders will be held virtually
on Friday, May 16, 2025, at 11:30 AM Central Time
(12:30 PM ET).
Transfer Agent and Registrar
Computershare Inc.
P.O. Box 43078
Providence, RI 02940-3078
1-800-406-4850
computershare.com/investor
Information about:
Voluntary purchases of ATI common stock for new
investors and current stockholders
Safekeeping of stock certificates at no charge
Stockholder Publications
ATI’s Annual Reports, Proxy Statements, Corporate
Responsibility Report, and other publications are
available on our website, ATImaterials.com, and also
upon written request to the Corporate Secretary at
the Corporate Headquarters.
For additional information contact:
investorrelations@ATImaterials.com
Independent Auditors
Ernst & Young LLP
Pittsburgh, PA
Stock Exchange Listing
The common stock of ATI Inc. is traded on the
New York Stock Exchange (symbol ATI).
Meet our team
Here, extraordinary is the daily ordinary.
ATI is where grit meets science, and
boundaries spark breakthroughs.
Our people work together, connected
by the shared purpose of solving the
world’s greatest challenges through
materials science.
SCAN ME
Follow us on social media
@ATImaterials
On the web at ATImaterials.com
Want to see how our people take on
the most difficult challenges every
day? Visit our YouTube channel:
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ATI and Starburst logo are registered trademarks of ATI Properties, LLC | © 2025 ATI.
Integrity
We do the right things the right way; it’s the
cornerstone of our relationship with every stakeholder.
Safety & Sustainability
We are committed to a Zero Injury Culture, protecting
our people and the planet through our products and the
way we operate.
Accountability
We do what we say we are going to do. We set a
standard for excellence and hold ourselves and our team
accountable for our actions, results and delivering value
for our customers.
Teamwork & Respect
We seek and celebrate diverse views, capabilities and
experiences to power our collaborative work environment.
Innovation
We embrace change and unique perspectives to create
sustainable value, acting with urgency and taking
calculated risks to learn and continuously improve.
Our values.